There are many investment plans available in the investment sector. Some investment plans have high risks and high returns whereas some investment plans have low risks and low returns.
Low-risk investments are those investments in which the element of risk is almost zero. It is beneficial for those who are not willing to take high risks but also want to get high returns.
Types of low-risk investment options
Let us have a look at some of the low-risk investment options:
If you want to invest in a low-risk investment plan, then one of the best investment plan options is a savings account. You can open a savings account at any bank of your choice. Banks offer a good rate of interest on your savings account balance. The more money you put in a savings account, the higher interest amount you will get with the passage of time. Though the interest rate is not very high, there are guaranteed returns. The returns may be high or low depending on the market situation. For instance, if you are earning an interest rate of 3% on your savings account and the inflation is 4% in the country, then you will lose 1% per annum in purchasing power. But, overall, a savings account is the best option to save and invest money with minimal risk.
Public Provident Fund (PPF)
PPF is another safe option to invest money with low risk. PPF is a type of fund where you can save money for the lock-in period of 15 years. The rate of interest on PPF is set by the government. The minimum deposit should be Rs.500 and maximum is Rs.1.5 lakhs. With a good rate of interest, it helps you to make a big financial corpus after retirement.
You can purchase various types of securities which are issued by the U.S. Government. These are I Bonds, EE Bonds, TIPS, Treasury Bonds, Bills, and Notes. You can buy these securities from the U.S. Treasury directly online. This investment plan has minimal risks.
Stable Value Funds
Stable value funds includes of investment deeds generated by banks and insurance companies. Each investment contract will pay out a specific rate of return for a specific period. The objective of this fund is to preserve your fund and provide liquidity. It also provides returns with less volatility. If you are close to retirement, then this option is one of the best low-risk investment plans for you.
Money Market Accounts
Money market accounts are quite similar to a savings account with the exception of a higher rate of interest. You need to maintain a particular balance in the account if you want the benefit of the higher rate of interest.
Certificate of Deposit (CDs)
A certificate of deposit is a safe choice for investment. Banks issue CDs. In this case, the bank will pay you a specific rate of interest over a specific period. If you withdraw the money before maturity, charges may apply. These are certainly low-risk investment options.
These are low-risk investment instruments issued by insurance companies. It pays you a specific rate of interest. It is similar to CDs except for the fact the interest accumulated tax-deferred. You have to pay an amount of penalty tax if you withdraw the annuity amount before reaching the age of 59 and a half. It has risk only if your insurer gets bankrupt. Fixed annuities are a good investment option for low risk, safety and longer use of funds.
Immediate annuities are investment tools for a regular income. It provides a consistent income per month. It is best suited for those who are about to retire and needs a guaranteed income for the rest of life.
The Bottom Line
It is rightly said that higher the risks, higher the returns. So, it depends on your capability of taking risks. Low-risk investment options are undoubtedly one of the safest and secure instruments to invest your money. So, go ahead and invest in one! All the best!