5 min read
Updated on Apr 20, 2023
If you are an investor with a low-risk appetite, who is averse to volatility and wants clear information on the returns that would be received, then you may find fixed-income investment plans to be quite lucrative. Fixed Income Investments provide a steady rate of interest that gets accumulated over a specified time period. These plans help an investor in diversifying his investment portfolio in a secure and non-risky way. As they do not get affected by general fluctuations in the capital market, low-risk investors, first-time investors, and retired people often prefer investing in fixed-income plans.
Before investing your hard-earned money in a scheme, even if it is a fixed income investment scheme, it is essential that you understand how they work. Knowing the details will help you choose the plan that suits you the best. Making a well-informed plan would further strengthen your financial plans for the future.
Also Read: GRP Have Triple Taxation Benefits
PPF is considered to be one of the safest and most preferred methods for fixed-income investors. A government guaranteed scheme, it is free from unpredictable market risks. You can make a premature withdrawal after a period of 5 years of account opening. Tax deductions under Section 80C of the Income Tax Act is another advantage of investing in the Public Provident Funds.
PPF has a maturity period of 15 years, which can be further extended by five more years. This extension is allowed only for Indian residents, NRIs cannot extend this tenure beyond 15 years. At present, PPF offers interest at a rate of 7.1%.
Guaranteed returns investment plans are designed in a way to fulfill the dual needs of an investor through investment and insurance. These are savings-oriented life insurance plans that have numerous inclusions like death benefits, maturity benefits, and wealth enhancement benefits through bonuses.
You can safeguard the future of your family in case of an unfortunate event that may occur in the time to come. Being the primary bread earner, it becomes all the more essential that you invest in this investment-cum-insurance plan. Not just that, guaranteed returns investment plans also offer you liquidity in the form of loans. Once your policy acquires a surrender value you are eligible to take a loan that can go up to 90% of the corpus that has been collected.
To further enhance the coverage, there is the option of riders. Apart from this, the tax benefits that you receive while paying the premium, at the time of maturity or premature death, make these plans highly efficient.
SCSS is an effective investment option for people who are 60 years and above. There is a short 5-year maturity period. SCSS offers guaranteed return investment plans which are paid on a quarterly basis currently at an interest rate of 7.4% per annum. The scheme reaches its maturity period in 5 years, which can then be extended to 3 more years.
At the time of deposit, you can make a payment of up to INR 15 lakhs, however, you have the freedom to opt for more than one account which can either be an individual account or a joint account with your spouse.
Implemented through the LIC of India, the Pradhan Mantri Vaya Vandana Yojana is a fixed-income investment plan that offers social security to senior citizens. Individuals over the age of 60 years can invest up to INR 15 lakhs in this scheme. Launched with the aim of averting the economic adversities faced by the elderly, PMVVY gives them an assured pension. The guaranteed rate of return is 8% annually for a period of ten years.
Fixed Deposits have always been the favourite investment option for those investors who are afraid of risks. Along with guaranteed returns and other benefits, the government insures your capital, up to INR 5 lakhs, if a case of bank failure arises. This deposit insurance scheme keeps your deposits safe and covers all the private, cooperative, and foreign banks.
Sukanya Samriddhi account is an investment scheme launched by the government in favour of a girl child. This account can be opened up to the age of 10 years of the child and can also be closed at the age of 21 years. Currently, the scheme offers an annual interest of 7.6%, which is compounded yearly.
You can make deposits up to 15 years from the account-opening date, however, withdrawal on a partial basis would be allowed only after the girl child turns 18 years. When the child turns 21, you have the option to close the account. Investments that are made towards the Sukanya Samriddhi account make you eligible for tax benefits up to INR 1.5 lakhs, under Section 80C of the Income Tax Act.
Fixed-income investment plans are indeed one of the best ways to invest your money and protect your life at the same time. They come with numerous benefits and admirable features that make them attractive and thus, are highly recommended for all age groups.
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If you are an investor with a low-risk appetite, who is averse to volatility and wants clear information on the returns that would be received,.
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