In today’s time, with a wide range of stocks available, it is not very difficult to find the right stock to invest in. You can research and find a plethora of options that can suit your needs and requirements.
With the increasing volatility and risk, more and more people prefer to opt for those stocks to invest in which guarantees a steady flow of fixed income. There are many options like ETF’s, Debt funds or money market funds that can generate a steady flow of returns.
But amid the plenty, how do you choose the right one? How can you ascertain which one is actually secured and will generate fixed income?
Let’s take a look at the best investment alternatives that can get you fixed returns. These are a few alternatives offered by the government and ensure maximum safety.
Public Provident Fund
Public Provident Fund or PPF is one of the most common investment methods in India. It is for the duration of 15 years in which investment is made, although it can be extended in blocks of 5 years. The minimum amount of investment is Rs 1.5 lakhs. There are plenty of factors that contribute to making it a sought after option. It provides a very attractive interest rate, which is exempted from tax as per the Section 80C of the Income Tax Act. Since the government backs it, it is an ideal option to invest in, if you are looking for the safety of funds.
Voluntary Provident Fund
Another lucrative investment option is voluntary provident fund. The only difference here is that in this fund, the employees contribute to their account. This investment is an ideal option for those investors who are looking for less risk and more wealth accumulation.
Listed PSU Bonds
As the name suggests, these PSU bonds are issued by the Government of India and have negligible risk involved. These bonds generally provide a higher rate of interest to the lenders and assured fixed returns, either weekly, monthly, quarterly or even yearly in some cases. The interest income on the listed PSU bonds is exempted from tax. But, if any gains are arising from the sale of these PSU bonds, you will have to pay tax on it under the head of capital gains which varies as per the duration of withholding.
Senior Citizen Savings Scheme
It can be clearly ascertained from the name itself that this scheme is an option for people who are over the age of 60. This saving scheme has a duration of 5 years, which can be further extended by 3 years. The maximum investment limit can be of Rs 15 lakhs only. Senior citizen savings scheme is a viable option for you, if you are close to your retirement age, looking for the security of your funds and want lower tax rates. This will generate a steady flow of income to help you get by your old age easily.
Pradhan Mantri Vaya Vandana Yojana
The government of India operates this fixed income investment alternative through the Life Insurance Corporation (LIC). This scheme provides safety to the investors who are over and above the age of 60 years. It acts as a shield against the fluctuations in the interest income due to adverse market conditions. Earlier the maximum limit of investment of this plan was only Rs 7.5 lakhs, but it has now been increased to Rs 15 lakhs. It offers a steady flow of income, just like a pension at the rate of 8% per year during the entire period of 10 years, making it an ideal option.
Sukanya Samridhi Yojana
This scheme was launched as a part of the Indian government’s initiative to save the girl child. Sukanya Samridhi Yojana can be availed by the parents of the girl child, from any time of her birth until the girl reaches the age of 10 years. In this scheme, small deposits can be made regularly. The minimum amount can be Rs 1,000, and the maximum goes till Rs 1.5 lakhs in one particular financial year. The account under this investment plan can stay open till 21 years from the date of the opening or till the time the girl gets married, certainly after the age of 18. It is a safe investment option to save funds for your daughter’s bright future and earn fixed interest income.
Since we have seen the government schemes and plans, here are a few other options:
- Bank Fixed Deposit
- Post office recurring deposit
- Post office time deposit
- Bank recurring deposits
- RBI 7.75% saving bonds
- Kisan Vikas Patra
- National savings certificate
- Life insurance
- Pension and annuity
- Mutual funds
- Company deposits
Although the government does not directly back most of them, they provide fixed incomes and higher security as well.
Important points to remember:
- Taxes are imposed only on debt funds which result in long term capital gains at 20%, whereas in the case of the short term capital gains it is added with other incomes.
- The prime motive of fixed income investment is the generation of steady return and not wealth generation.
- Professional fund managers manage them.
- They are highly liquid in nature, and an investor can easily turn them into cash.
- Debt funds provide better returns compared to other money market instruments.
There is a wide range of stocks and securities that can be called fixed-income investments. They are called so because they generate a fixed rate of return, which you can either receive periodically or at the end of the given period of investment. Whatever the case may be, these investments can help you in earning steady returns along with the security of your investment. They are not as risky as other options like equity or derivatives, which makes it a popular choice especially among senior citizens or retired people. So, if you have ample funds lying in your trading account, and wish to put it to right use, go for a plan that generates fixed interest income for you and put all your worries to rest.