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4 Smart Must-Follow Investment Tips for Beginners in India
24 Jul 2023

Some investors like to play it bold, while others like to play it safe. For those with a healthy appetite for risk, there are multiple investment options that fetch corpus over time. However, these options may or may not fetch fixed returns, depending on the dynamics of the market. But for those with a low appetite for risk, there are several options that fetch fixed returns.

Here are some of the most commonly opted for investment instruments that guarantee fixed returns:

Fixed Deposit Account:
Also popularly known as FD, this low risk investment instrument offers higher interest rates than a regular savings account until the maturity date. Which means, money can’t be withdrawn before maturity. The interest rates usually vary between 4-11%, and the tenure can be for 7, 15 or 45 days to as high as 10 years. Usually, the interest (fixed return) on Fixed Deposit (FD) is credited to the investor’s savings account or sent via cheque every 3 months from the date of the deposit.  However, an investor may choose to reinvest the interest, which then results in compounding of the interest, and the investor will get the compounded interest only on maturity of the deposit.
Benefits at a glance

FDs offer income tax and wealth tax benefits to investors

Investors can avail loans with up to 80-90% of the deposit in FD, with a 1-2% interest rate over and above the rate offered on the deposit

Residents of India can open an FD account for minimum 3 months

Post Office Monthly Income Scheme:

This investment option is not too popular among urban investors, but it is one of the safest options that lets you invest money and earn fixed returns. Anyone who wishes to earn a monthly income can open this account. You can earn 8% interest on your deposit per year, which then is disbursed to you every month as fixed returns. However, there’s no compulsion for you to withdraw your money after maturity (5 years), but then it’ll earn interest that equals a bank account’s. You will also be eligible for bonus, in addition to fixed returns, if you retain your scheme for 5 years. The POMIS doesn’t fall under sec 80C, so there’s no tax exemption for the amount you invest here. However, there’s no TDS cut in this scheme.
Benefits at a glance

Minimum investment amount is 1500 or in multiples

POMIS offers auto credit facility of fixed returns to savings account of the investor if both accounts are at the same post office

You can avail the facility of reinvesting your amount on maturity of the account

Public Provident Fund:
This is a savings plus tax-savings investment instrument that will fetch you fixed returns. It was introduced to help people invest small savings and earn fixed returns with tax benefits. The duration of the scheme is 15 years, which then later can be extended for 1 or more blocks of 5 years each. There are 3 options that you can choose from once the maturity period is over – withdraw entire amount, extend the scheme with no further contribution from you, or extend the scheme with further contribution from you.
Benefits at a glance

A yearly deposit of minimum 500 is required to open and maintain a PPF account However, you can deposit as much as 1.5 lakhs per year under Section 80C of the Income Tax Act. A PPF calculator can help you determine how much your PPF investment will grow over time given a specified rate of interest and investment amount. This might assist you in determining how much you need to invest in PPF to meet your financial objectives.

Annual contribution to the scheme, which is up to 1.5 lacs/year, qualifies for tax deduction under 80C

Contribution to PPF accounts of the spouse or children are also eligible for tax benefits

Senior Citizen Saving Scheme:
This investment option for earning fixed returns is the best scheme for citizens above 60 yrs of age. Investment in this scheme can be initiated only by people of 60 yrs of age and above, but the age limit can be relaxed to 55 yrs in case of voluntary retirement. To enjoy fixed returns from SCSS, the investor can’t invest more than 15 lacs a year. However, the investor can open more than one account by opting for a joint account. The interest rate is revised on a timely basis, and once an investor locks in, the rate remains unchanged till maturity of the scheme.
Benefits at a glance

SCSS has tenure of 5 years, but can be extended for 3 years after maturity

There’s no penalty if the account is shut within the extended period after maturity

So now that you are aware of investment options that fetch fixed returns, you should immediately opt for one depending on your financial needs. After all, the earlier you begin, the more you will earn from your investment over the years.

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