Normally we all are working for money and using this money to fulfill our short term or long term needs. So, after earning money all of us must invest it somewhere so our money works for us.

To do that we have to choose risk-free investment options that give small return but it secures our capital or we can choose high-risk investment options, however, it can generate high return but on the flip side also chance to lose our capital.

In India, there is a wide range of investment options available. The list includes small government schemes, gold investment schemes, bonds, stock market, mutual funds, real estate, and many more.

From all the above investment products today we are going to discuss the best risk-free investment option available in India.

So, let’s get start with…

List of Risk-Free Investment Option In India

(1) Public Provident Fund (PPF)

The above image gives an overview of the Public Provident Fund Scheme (PPF).

What is a PPF account?

PPF account is the 15 years saving + investment scheme introduced by the government of India in 1968 to generate a secure, risk-free, and tax-free return on the invested capital.

This investment option is most suitable for the person who wants to generate a corpus for their retirement.

Also, newly married couples can use this scheme to cope with the high-cost education of a child, the marriage of the child.

Who can take benefit of PPF account?

• All Indian citizens are eligible to take benefit of the PPF account.
• PPF account is held by the only individual account holder.  A joint account is not allowed in the PPF scheme.
• One person opens only a single PPF account, it means multiple PPF account is not allowed on a single name.
• Bellow 18 year individual also eligible to open PPF account but here registering guardian is a must.

Example: suppose you want to open a PPF account for your child and he/she is minor now in this case you are work as guardian for this PPF account.

• Non-resident Indians and HUFs are not eligible to open a PPF account.
• It is important to add nominee while opening the PPF account because, in case of the death of the account holder, the outstanding amount will be paid to the nominee.

Where to open PPF account?

A PPF account is open by any government banks like State Bank of India (SBI), Bank of Baroda (BOB), Punjab National Bank (PNB), and many others.

Nowadays private banks like HDFC, ICICI, Kotak Mahindra, Axis are also providing facilities to open PPF account.

A part from banks, you can open PPF account via post office.

There is facility to open PPF account via online mode or offline mode.

Documents to Open PPF account

• PPF account opening form, please download from here.
• Pan card/Aadhar Card as Identity proof.
• Aadhar card/ voter Id as a resident proof.
• Cash or cheque of the investment amount.
• 2 Pass-port size photocopy

What is the interest rate on PPF account?

PPF interest rate is changing every 3 months (quarterly).

The current interest rate on PPF account is 7.10% p.a. PPF interest rate is compounded annually.

For interest calculation, the minimum amount is considered in the PPF account between the 5th of every month and the last date of every month. Whatever the interest is generated is deposit every month.

What is the investment amount for the PPF account?

Individuals can start investing with minimum Rs.100 in PPF account and a maximum of 1.5 lakh in one financial every.

PPF account provides facility to deposit amount at one-time investment mode or via monthly/quarterly/half-yearly mode.

Also, an account holder must deposit the decided amount via monthly/quarterly/ half-yearly mode. If an individual is failed to deposit said amount he/she can be panelized.

PPF account holders can use different modes of payment like cash deposit, cheque, demand draft, or online fund transfer.

Key Feature of PPF account

• This financial instrument is totally under the control of the Indian government due to that it is known as the most secure and risk-free investment option in India.

• The PPF account has a minimum of 15 years’ tenure and one can extend it every 5 years after completing the first 15 years.

• However, for investor’s convenience government has provided the facility to withdraw the amount from the 7^th year (after completing 6 years).

• But one can withdraw up to 50% amount from the account. Account-holders eligible to withdraw amount only one time in the single financial year after 6 years.

• All invested capital and gained return in this scheme are tax-free and this is the most effective benefit of this financial instrument.

• In addition to that, the PPF deposit saves income tax under section 80C.

• PPF account can be close after completing 15 years from the date of account opening.

• To close the PPF account one can submit FORM C to your concern branch.

To Sum up, PPF is the most suitable and well-known risk-free investment option for those who want to generate a huge corpus for long term goals like., retirement, higher education of the child, a marriage of the child.

Also Read: How to start investing in the Stock Market In India: A Beginner Guide

(2) National Saving Certificate (NSC)

The above image gives an overview of the National Saving Certificate (NSC).

What is NSC?

A national saving certificate is 5 years saving + investment scheme initiated by the government of India.

Same as PPF this is also a risk-free investment option for the investor who wants to generate secures and fixed return on invested capital.

Mainly this scheme attracts low to mid-income level investors.

Who can take benefit from NSC?

Only individual Indian citizens can invest in this scheme.

Bellow 18 year individuals are also eligible to apply for NSC but here registering guardians is a must.

Example: suppose you want to take NSC for your child and he/she is a minor now in this case you are working as a guardian for this NSC certificate.

Non-resident Indians are not allowed to purchase this certificate.

But the person becomes an NRI after purchasing NSC he/she can continue to hold their certificate till maturity.

A joint application is also eligible for NSC. There are two types of joint applications available (i) joint A & (ii) joint B

Joint A: In this case, both holders have a certificate but the maturity amount shares between both holders equally.

Join B: In this case, both holders have a certificate but maturity amount paid to a single holder only, and that holder is decided during the time of application.

Nomination facility is available in NSC. So, the certificate holder has the right to nominate his/her family member.

Where to take NSC?

All the post office available in Indian region has the facility to provide NSC. Without the post office, no government body has the right to provide NSC.

Documents to open NSC

• NSC account opening form, you can download from here.
• Pan card/Aadhar Card as Identity proof.
• Aadhar card/ voter Id as a resident proof.
• Cash or cheque of the investment amount.
• 2 Pass-port size photocopy

Interest rate on NSC

Interest rate provided by NSC is change on quarterly basis.

Currently NSC is providing 6.8% (April-June 2020-2021) interest.

NSC calculation of interest is done on a half-yearly basis and it’s compounded annually and reinvested by default.

However, the invested capital and gained interest are given at the time of maturity to the NSC holder.

Key feature of NSC

• NSC has 5 years of maturity period. In case of an investor’s sudden death, it can be enchased.

• The minimum investment amount for NSC is Rs. 100 and maximum there is no limit to invest in NSC.

• The investor has the right to purchase as many NSC as he wants on the same name.

• NSC can be transferred from one person to another person as well as it is also transferred from one post office to another post office.

• NSC has a facility to save tax under 80C up to 1.5lakh.

• In case of loss, destroy stolen NSC certificate before maturity, investor get a duplicate certificate issued by the post office but there is some process must have to follow.

To Sum up, National Saving Certificate is the scheme that is the best option instead of fix deposit if your investment horizon is around 5 years. This is initiated by the government of India and handle by the post office so it is a risk-free investment option.

(3) Senior Citizen Saving Scheme (SCSS)

The above image gives an overview of the Senior Citizen Saving Scheme (SCSS).

What is SCSS?

SCSS is 5 years saving + investment scheme for senior citizens of India to invest their hard earns money after retirement.

SCSS is run by the government of India due to that it is a reliable and risk-free investment option for all Indian residents age above 60.

Who can invest in SCSS?

As per the name of the scheme only citizens of India whose age is more than 60 are eligible to invest in this scheme.

Only retired defense people are eligible to invest in this scheme at the age of 50 years.

HUFs and NRIs are not allowed to invest in SCSS.

Joint application for SCSS is allowed but 2^nd holder must be a spouse of 1^st holder.

Nomination facility is available for SCSS. So, the investor has the right to nominate his/her family member.

Where to go for opening SCSS?

Investors can purchase SCSS from all Indian post office and public, private banks are available in India.

There is no any online facility available to purchase SCSS.

This scheme is organized by the Government of India due to that all rules and regulations are the same at all post offices and banks.

Documents required for SCSS

• SCSS account opening form, please download it from here.
• Pan card/Aadhar Card as Identity proof.
• Aadhar card/ voter Id as a resident proof.
• Passport/ senior citizen certificate/ Birth certificate as age check proof.
• Cash or cheque of the investment amount.
• 2 Pass-port size photocopy.

Interest Rate on SCSS

Same as PPF and NSC, in SCSS interest rate, is varies quarter by quarter. Currently, the interest rate of SCSS is 7.4% (April-June 2020-2021).

SCSS provide highest return as compared to PPF & NSC.

Interest in SCSS is calculated on a quarterly basis and added to the account on maturity time.

Key Feature of SCSS

• SCSS is 5 years lock-in saving + investment scheme for senior citizens of India. After completing 5 years of lock-in, it is possible to extend up to the next 3 years.

• In the SCSS deposit amount is a lump sum, a minimum amount is Rs.1000 and maximum up to 15 lakh.

• An individual investor can invest in more than one SCSS. But the investment amount mustn’t be more than 15 lakh on a single holder.

Example: Suppose I want to open SCSS in SBI bank and my investment amount with this SCSS is 5 lakh after a few months or year I want to open another SCSS with the post office at that time I am not able to invest more than 10 lakh with this SCSS.

So, my total investment amount in SCSS is not more than 15 Lakh.

• The investment made in the SCSS account is qualified for income tax deduction under section 80C up to 1.5 lakh.
• But, here take into consideration that whatever the interest earned via SCSS is taxable.
• Premature withdrawal allowed in SCSS but after completing one year from the opening of SCSS.
• If the account closer takes place after 1st year and before the ending of 2nd year, 1.5% of the deposit is deducted as premature charges.
• Suppose account closer take place after completing 2 years, 1% of deposit is deducted as premature charges.

To Sum up, the Senior Citizen Saving Scheme is the most suitable platform for senior citizens person of India to park their money after retirement. This is no risk or a risk-free investment option.

Also Read: Fundamental Analysis of Stocks: A Beginner Guide

(4) Post Office Monthly Income Scheme (POMIS)

The above image gives an overview of the Post Office Monthly Income Scheme (POMIS).

What is POMIS?

As per the name, this is a monthly income scheme provided by the Indian post office.

This scheme is run by post office which is under control of the Indian government. So, this is a risk-free investment option.

Who can invest in POMIS?

All Indian residents are eligible to invest individually or jointly in this scheme.

Minor with more than 10 years are also eligible to open POMIS account.

NRIs are not eligible to invest in this scheme.

Where to open POMIS?

As earlier said this scheme is run by the Indian post office so investors have to go to the post office to take advantage of this scheme.

There is no any online facility to open Post office MIS.

Documents require opening POMIS

A post office saving account is required for POMIS. If you do not have a post office saving account, 1^st open it.

Then, take the POMIS form from the post office and submit it with the following documents.

• Pan card/Aadhar Card as Identity proof.
• Aadhar card/ voter Id as a resident proof.
• Cash or cheque of the investment amount.
• 2 Pass-port size photocopy.

Interest Rate on POMIS

The interest rate of POMIS is changed every quarter as it is a safe and risk-free investment option due to that, there is no much variation in interest rate.

Current interest rate on POMIS is 6.6% (April-June 2020-2021) p.a.

How POMIS works?

In the Post Office MIS scheme, a one-time investment is done by an investor based on that capital investor get monthly interest.

Example:

Suppose I want to invest 2 lakh in POMIS and interest rate on POMIS is 6.6%.

Based on that, my yearly interest gain is rs. 13200 (200000*6.6% = 13200). So, monthly I receive 1100 rs. (13200/12= 1100).

So, at the end of 5 years, I will earn 66000 rs. (13200*5=66000/-) based on a 6.6% yearly interest rate.

Key Feature of POMIS

• Post office MIS is 5 years lock-in scheme. In this scheme, investors make a one-time investment and get a monthly return on invested capital.
• Minimum 1500 Rs. (or in multiple of 1500 rs.) Investors can invest in POMIS and the maximum limit is Rs. 4.5 lakh.
• In case of joint holder maximum limit to invest in POMIS is Rs. 9 lakh.
• At the time of maturity (after completing 5 years) invested capitals return to the investor.
• A single investor can open multiple POMIS but the investment limit across all accounts are up to 4.5 lakh only.
• The premature closer of POMIS is allowed after completing 1 year. But there is a penalty for a premature closer.
• If investors withdraw money from this scheme before completing 3 years, 2% penalty imposed on invested capital, and withdraw money between 4^th and 5^th year, 1% penalty imposed on invested capital.
• Whatever the interests earned by the investor is taxable

To sum up, post office MIS guaranteed and risk-free investment option and mostly suitable for a retired person who doesn’t have any fixed source of income.

Even for the individual who has ideal corpus in saving account and want to earn more return than fix deposit or saving account.

(5) Sukanya Samriddhi Yojana (SSY)

The above image gives an overview of the Sukanya Samriddhi Yojana (SSY).

What is SSY?

Sukanya Samriddhi Yojana is the scheme launched by the Modi government in the year 2014 as a part of the ‘Beti Bachao Beti Padhao’ campaign.

Parents of the girl child are facing major issues regarding higher education & marriage after 18 years of girl. To cop up with this issue government launched this scheme.

This scheme is a higher interest-earning and risk-free investment option as compared to other government saving scheme.

Who can take benefit of SSY?

Parents or guardian of a girl child who has not crossed the age of 10 years can take benefit of this scheme on behalf of their girl child.

The beneficiary of this scheme is the girl child who stays in India from the time of taking this scheme until the maturity of this scheme.

In single family not more than 2 girl child take benefit of this scheme.

An account must handle by a girl child after she turns 18. Also, a girl child has the right to operate the account by herself when she crosses the age of 10.

Where to open SSY?

The facility of SSY is provided by all branches of the Indian post office and authorized commercial bank in India (i.e SBI, Canara Bank, Axis Bank, Bank of Baroda, ICICI Bank and many others)

Documents to open SSY

• Birth certificate of the girl child.
• Pan card/Aadhar Card as an Identity proof of guardian.
• Aadhar card/ voter Id as a resident proof of guardian.

Interest rate on SSY

Currently, the interest rate of Sukanya Samriddhi Yojana is running 7.6% (April-June 2020-2021).

Same as other government schemes the interest rate is various on every quarter and that are decided by the ministry of finance.

The interest rate provided on Sukanya Samriddhi Yojana is compounded yearly.

How SSY works?

The deposit duration for this scheme is 15 years from the account opening date but the maturity period is 21 years for this scheme.

After opening SSY account guardian or parents of girl child deposit amount on monthly basis or one time in a year. That is decided at the time of account opening.

Whatever the interest earned on invested capital is credited at the end of the year into account.

The maturity of this scheme is 21 years from the opening of the SSY account and all invested capital and interest paid to the beneficiary with the process of account closing.

Premature withdrawal is only possible in the following cases in SSY.

• In case of the death of a girl child, the parent or guardian has to produce a death certificate of a girl child and withdraw invested capital and interest earned on that and close the account.

• If a girl child attained marriage at the age of 18, in this case, premature withdrawal is allowed but she needs to apply before one month of marriage or after three months of marriage along with supporting documents.

• If a girl child becomes non-resident or non-citizen of India in this case premature withdrawal is possible.

• For higher education after completing 18 years or 10^th standard of the school, but the beneficiary needs to produce supporting documents.

Key Feature of SSY

• The minimum investment amount in SSY is rs. 250 and the maximum cap is 1.5 lakh in a single financial year, up to 15 years.

• Deposit above the maximum cap will not earn any interest and it can be withdrawn anytime by a depositor.

• If an investor fails to deposit amount during any financial year, there is a penalty of rs. 50 for that financial year.

• Account-holders receive passbooks to maintain records for SSY from the post office or bank.

• Passbook maintains records like account opening date, girl child birthdate, account number, name, address of account holder along with deposit amount, and interest credit to the account.

• An investor takes tax benefit under section 80c up to 1.5 lakh per annum for the deposited amount.

• Whatever interest earns is totally tax free for this scheme.

• The investor can deposit amount via online mode, cash, cheque, or demand draft.

• The investor has the right to transfer the SSY account from the post office to the bank and bank to the post office.

To sum up, Sukanya Samriddhi Yojana is a healthy, high-interest paying and risk-free investment option provided by the government of India and every parent or guardian must have to take benefit of this scheme for the betterment of their girl child.

(6) Kisan Vikas Patra (KVP)

The above image gives an overview of the Kisan Vikas Patra (KVP).

What is KVP?

KVP is the saving + investment scheme provided by the government of India and available in the Indian post office and public sector banks.

This is long term and risk-free investment option for an investor who wants to double their investment at the end of maturity.

Who can take benefit of KVP?

As per its name initially, this scheme was a launch for the benefit of Indian framers (KISAN) in 1988.

But in 2014 this scheme was launch with new features and modification, in that it is now available for all Indian citizens.

Join holders and nomination facility allowed in this scheme.

Parents and guardians can take benefit from this scheme on behalf of their minor child.

NRIs and HUFs are not eligible to take part in this investment scheme.

Where to take KVP certificate?

The investor can take KVP certificate from all branches of the Indian post office and the public sector banks like (SBI, BOB, PNB, Canara Bank, Bank of India, etc.)

Documents for KVP

• KVP account opening form, you can download from here
• Pan card/Aadhar Card as Identity proof.
• Aadhar card/ voter Id as a resident proof.
• Cash or cheque of the investment amount.
• 2 Pass-port size photocopy

Interest rate on KVP

Same as other risk-free investment options in government schemes it has also change the interest rates on a quarterly basis.

The current interest rate for KVP is 6.9% p.a. and the interest rate is compounded every year.

How KVP works?

After submitting an application form to post office or bank you will receive one KVP certificate.

The KVP certificate is like your identity slip for KVP. It contains information like KVP serial number, Investment amount, maturity date with maturity amount.

The simple mechanism of KVP certificate investment is that at the time of maturity you receive a 100% return on your capital.

Example: Suppose I have invested 1 lakh rupees in KVP at maturity I receive 2 lakh rupees

The investment duration for this scheme is 124 months (10 years & 4 months).

If an investor wants to invest more than 50,000, he/she needs to produce a pan card and if the investment amount is more than 10 lakh it’s necessary to produce salary sleep, bank statement, ITR document, etc.

Key feature of KVP

• This is mostly suitable for long-term investors who do not want to take much more risk on their capital and want to gain a decent secure return.

• Pre-maturity of the KVP certificate is not possible before 30 months.

• The minimum investment amount for KVP is 1000 and there is no maximum limit for investment in KVP.

• Invested capital and generated returns are taxable. However, tax deducted at the source of TDS.

• KVP can be transferred from one post office to another also from one person to another person.

To sum up, KVP is a very secure and risk-free investment option for those whose investment horizon is long and does not want to take a risk.

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