Top 10 Low-Risk Investments for 2024

Investments are undeniably important for your financial growth. However, investments also tend to come with inherent risks. There is always a chance that your investment will fail, leading to a loss of your savings. The global investment arena operates on the high risk-high reward principle, meaning that investments with the highest risks usually have the best rewards. But what if you’re reluctant to take risks and are cautious by nature? Then investing your money can end up being an anxiety inducing process.

The good news for risk averse investors is that there are quite a few low-risk investment options. These investments are capable of providing decent returns in the long-term. Moreover, you are unlikely to lose your original principal amount in low-risk ventures. The desire for stability and security is a universal one; in fact, several reports highlight how 51% of women in India choose low-risk investments. On that note, here are the top 10 safe investments that are perfect for risk-averse investors.

What are Investment Risks?

Before going into the specifics, let's first understand what we mean by investment risk. Risky investments have uncertain returns, meaning that there is no guarantee that you will make a profit. Moreover, some high-risk investments can even lead to a loss if your assets underperform. Of course, risk levels differ depending on the investment that you choose.

Investment risk may be impacted by several factors like economic changes, market volatility, and interest rates. If you are a risk-averse investor, your main aim is to safeguard your money while still getting stable returns. Low-risk investments may potentially have lower returns, but you will have the security of knowing that you won’t make a loss. Below is a look at the best low-risk investments that you may opt for.

Top 10 Low-Risk, Safe Investments in 2024

For risk-averse investors, here are ten reliable investment options that provide safety of steady returns.

Guaranteed Income Plans-

These plans help you create a second income stream for your life goals or retirement. In these plans, you pay a certain amount of premium for a specific term. Your premiums act as your investment, and you receive returns at a fixed rate that is set at the inception of your policy. At the same time, these plans also come with life coverage throughout the policy tenure. Hence, guaranteed income plans offer survival/maturity benefits while also securing your loved ones in case of your untimely demise. Some plans may also come with optional riders, like the critical illness rider, that enhance the financial security provided to your loved ones.

ULIPs-

Unit-Linked Insurance Plans (ULIPs) combine the benefits of life insurance with the returns offered by market-linked funds. Your premiums will not only pay for your life cover but will also be invested into funds that are professionally managed by the insurer. If you are completely risk-averse, then you can opt to invest in debt funds to ensure steady returns. You also have the option to switch funds according to your financial needs. ULIPs help you recalibrate your portfolio based on market conditions, thereby minimizing your losses. ULIPs can offer attractive returns, while also securing your family with life coverage.

Fixed Deposits (FDs)-

Fixed Deposits are one of the most popular investment options among conservative investors. In a fixed deposit, the invested principal remains secure and you keep earning interest at a specific rate at periodic intervals, i.e. monthly, quarterly, or annually. The interest rates are higher in comparison to savings bank accounts.

Public Provident Fund (PPF)-

The Public Provident Fund (PPF) is a long-term investment option backed by the government. It offers tax benefits under Section 80C and tax-free returns, making it an attractive choice for risk-averse investors. The rate of interest is usually higher than savings accounts or fixed deposits in most cases. However, there is a 15-year lock-in period during which you cannot withdraw your assets.

Municipal Bonds-

Municipal bonds are issued by state or local governments to fund public projects. They offer a fixed rate of interest and are considered relatively safe for risk-averse investors. Debt securities are thus released in the market by local bodies and have near-zero default risks. They also come with attractive tax exemptions.

Certificate of Deposit (CD)-

Certificates of Deposit (CD) are similar to fixed deposits, but they generally have a higher entry cost. Moreover, the maturity date and interest rate are fixed in CDs. They are low-risk choices for investors and offer higher interest rates compared to regular savings accounts, making them good options to diversify your portfolio.

Treasury Bills (T-Bills)-

Treasury Bills are short-term government securities with maturities ranging from 91 days to 364 days. They are issued at a discount and redeemed at face value, thereby providing a secure investment option. In fact, treasury bills have the highest liquidity amongst all Government securities.

Sovereign Gold Bond (SGB)-

Sovereign Gold Bonds are issued by the government and are a substitute for holding physical gold. They offer interest along with the potential for capital appreciation. The costs and risks involved in physical storage of gold are completely eliminated under this system. Investors are assured of the market value at maturity under this system.

National Pension Scheme (NPS)-

The National Pension Scheme is a government-backed retirement savings scheme. It offers tax benefits and the choice to invest in a mix of equity, corporate bonds, and government securities. Not only can you avail of Section 80C deductions up to ₹1.5 lakh, but you can also get an additional deduction of ₹50,000 under Section 80CCD (1B).

Senior Citizen Savings Scheme (SCSS)-

The Senior Citizen Savings Scheme is a government-backed scheme specifically for senior citizens. It offers a high interest rate and tax benefits under Section 80C, making it an attractive option for retirees. The scheme has a tenure of 5 years, which can be further extended by 3 more years. Plus, the account is transferable throughout India.

Comparing the Top 10 Safe Investment Options in India

Here’s a quick look at the pros and cons of each investment that’s been listed above for your understanding.

INVESTMENT OPTION	PROS	CONS
Senior Citizen Savings Scheme (SCSS)	High-interest rate Tax benefits	Premature withdrawal penalty Limited to senior citizens
National Pension Scheme (NPS)	Tax benefits Flexible investment options	Long lock-in period until retirement Market-linked returns
Sovereign Gold Bond (SGB)	Government-backed Interest income along with gold price appreciation	Long tenure Market price risk at the time of redemption
Treasury Bills	High liquidity Virtually risk-free	Lower returns than long-term securities Not for long-term investment goals
Certificate of Deposit	Higher interest rates than savings accounts Low risk	Penalties for early withdrawal Lower returns than some other investment options
Municipal Bonds	Low default risk Regular interest income	Lower liquidity compared to government bonds Interest rate risk
Public Provident Fund (PPF)	Sovereign guarantee Tax Benefits Interest compounding opportunities	15-year lock-in period Limited liquidity
Fixed Deposits (FDs)	Guaranteed returns Flexible tenure options Low risk	Lower returns than market-linked investments Penalties for premature withdrawal
ULIPs	Fund Switching High long-term returns Tax Deductions Life coverage	5-year lock-in period
Guaranteed Income Plans	Fixed returns Pension/income option Tax Deductions Life coverage and add-ons	Possibly moderate returns than market-linked plans

 

Conclusion

Selecting the appropriate investment is important for secure your finances, especially if you are cautious about potential risks. The investment options mentioned above can be both safe and fruitful from a wealth-creation standpoint. However, make sure that you diversify your portfolio across multiple options without putting all your eggs in one basket. Guaranteed income plans can be your gateway to a smooth retirement, and you can have a mix of ULIPs, government bonds, FDs, and gold to hedge against inflation.

 

Swati Tumar - Travel & Finance Writer   

Swati is a Writer in the day and an illustrator at night. Among her interests, she is quite fond of art and all things creative. She often indulges herself in creating doodles, illustrations, and other forms of content. She identifies herself as an avid traveler and shameless foodie.