Investment Options Beyond Fixed Deposits

For decades, fixed deposits were a safe investment option. The promise of guaranteed returns against very low risk was what made it so lucrative. 

Fixed Deposits had a great run, but over the years, the returns it offered have declined significantly. And that is why even the most risk-averse investors are looking at other options that offer better returns. 

Luckily, we at Grip have various alternative investment opportunities that investors can explore. Here are a few of them.

Better Investment Options other than Fixed Deposits:

Let us have a look at some of the better investment options than Fixed Deposits.

1. Post Office National Savings Monthly Income Account (POMIS)

For those looking to invest a significant chunk with low risk, POMIS comes across as a great choice. The scheme has a maximum ? 4.5 Lakhs under single ownership & a cap of 9 Lakhs for joint ownership. Joint ownership accounts allow for a maximum of 3 adults.

POMIS is also a great option for securing your child’s future as it allows minors above the age of 10 to open an account via a guardian. 

But really, what makes POMIS a great investment is the lucrative return rate of 6.6% monthly, all through its maturity period of 5 years. 

2. NPS Tier II

Those investors who already have an NPS Tier 1 account are eligible to opt for an NPS Tier 2 account with a minimum contribution of ? 1,000.

One of the main reasons investors should opt for NPS Tier 2 is the fact that it offers much better returns as compared to regular bank FDs, thus making it the smarter choice. 

3. 5-Year National Savings Certificate (NSC)

The National Savings Certificate is a fixed-income investment scheme that you can open in any post office branch in India. The scheme is a part of the Government of India initiative. It comes with a fixed maturity period of 5 years. 

Additionally, there is no maximum limit for investment in NSC, but investments in NSC up to  ? 1.5 lakh is eligible for tax rebate under Section 80C of the Income Tax act. Presently NSC offers an interest rate of 6.8% compounded annually that is paid on maturity.

4. Corporate Bonds

To put it simply, a corporate bond is a type of debt issued by a large firm and sold to investors. These firms use corporate bonds to raise capital. In return, they pay investors back interest payments at a fixed or variable rate. 

When the bond expires, the original investment is returned to the investor. The returns can be around 6.5% to 8.5% depending on how well the company performs. This means investors can earn bountiful returns. 

4. Debt Mutual Funds

Investors today want to have a diversified portfolio & debt mutual funds add great value to that mix. A debt mutual fund invests in fixed-income instruments like Corporate Bonds or Government Bonds along with money market instruments. This ensures that it is not affected much by market volatility. 

6. Liquid Funds

Liquid funds are debt funds that invest in short-term assets like treasury bills, government securities, certificates of deposits, repurchase agreements or commercial papers, etc. As per SEBI norms, liquid funds are only allowed to be invested in debt and marketable securities with maturities of up to 91 days. 

The liquid funds do not have any lock-in period like fixed deposits. They are popular investment options for those who want liquidity in their investments and a higher rate of returns, as compared to Fixed Deposits.

7. Equity Funds 

Equity Funds are mutual fund schemes that invest their assets in the stocks of various companies, based on the investment objective of the underlying scheme. Equity Funds are also known as Growth Funds. They are good investment options for capital appreciation as they carry with them the potential for long-term wealth creation. 

Equity funds can either be active or passive. In the case of an active fund, a fund manager looks after the markets, researches companies examine their performance and looks after the best stocks to invest in. Whereas in a passive fund, the fund manager builds a portfolio based on a popular market index like Sensex, Nifty, etc.

Conclusion

All investors look to build long-term wealth through instruments that offer consistent returns. While Fixed Deposit was the top choice to achieve this, over the years, it is not been enough. Diversifying your portfolio with alternatives is a significantly better choice. 

At Grip, we offer an easy-to-use digital investment platform where you can explore a variety of investment options that suit your risk appetite and make the choice that is best for you accordingly!