High-growth investment opportunities such as stock market investments, mutual funds, financial derivatives, etc. always seem to be attractive.
At times, we tend to ignore the risks involved in such high stake investments. Even though these type of investments promise huge returns, they are also subject to many risks such as market risk, political risk, liquidity risk, taxation and much more.
Often times, investors who invest in such investments without considering the risks end up losing their money instead of earning huge profits.
However, there are many types of investments in the market that promise reasonable returns while being low-risk.
One such lucrative investment option is a fixed deposit which offers guaranteed returns and involves negligible risks as compared to mutual funds and other such investments.
Types of investments according to their risk levels:
Investments can be classified into three categories according to their risk levels, i.e., low-risk investments, medium-risk investments, and high-risk investments.
Low-risk investments –
These investments are also termed as safe investments as they are subject to minimal markets risk, tax risk, etc.
Saving accounts, government bonds, fixed deposits, life insurance, etc. belong to this category.
Though government bonds and life insurance provide high returns, they also take time to mature. Hence you will have to wait for a long time if you wish to earn substantial profits. On the other hand, saving accounts have low-interest rates.
Fixed deposits are indeed one of the rare low-risk investments that generate ample returns in quick time.
Medium-risk investments –
Medium-risk investments are the investments which generate good returns but are also subject to quite a few risks.
When you invest in stocks, the returns depend on the performance of the financial markets. Real estate investments are also subject to general market risk, liquidity risk, etc.
Utility stocks, real estate and mutual funds such as equity and income funds belong to this category.
High-risk investments –
High-risk investments can provide high returns, but they also carry different types of risks. For example, apart from market risk and interest rate risk, mutual funds such as ETFs might also involve liquidity risk.
Mid and small-cap stocks, mutual funds that are related to technology, power, gas, oil, etc. can be counted in high-risk investments.
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Risk-free investment strategies that provide good returns:
Investment strategies can mean different for different people.
If you have just started working you will look at investments that offer good returns after some years, but a businessman will seek investments that provide quick returns.
Fixed deposits are beneficial in both the scenarios as they come with flexible lock-in periods and high-interest rates.
Safeguard your investment
One of the best methods to safeguard your investment profile is by investing in multiple types of investment options.
This approach is known as diversification. Therefore, when one investment performs below expectations, the better-performing investments can cover your losses.
You can also consider investing in fixed deposits of different amounts and tenors across different lenders to get assured returns on a regular basis and save on tax. This is also known as laddering or staggering of investments.
Cover your financial needs
Instead of just focussing on high returns you can invest in the schemes that provide consistent returns over a period of time and help you cover all your needs.
Cumulative fixed deposits that sum-up the interest of your deposited amount over its tenure and provide it along with the principal amount upon maturity are a good option.
Alternatively, you can choose to avail non-cumulative fixed-deposits that provide regular (monthly, quarterly, six-monthly or annual) returns.
Moreover, you can also get loans at low-interest rates against FD if there is a sudden need of funds for your child’s education or marriage or any other financial requirement.
It is not wise to choose high-risk investments without thoughtful consideration. Risk tolerance is the ability of an investor to adjust according to the fluctuating market conditions and investment returns.
Therefore, you need to contemplate your risk tolerance before making any investment decision.
Fixed deposits offered by companies Bajaj Finance are better than traditional Bank Fixed Deposits because they not only provide high-interest rates but are also assured for their safety and credibility by CRISIL and ICRA.
Senior citizens get the benefit of higher interest rates.
With a minimum amount of INR 25,000, you can invest in Bajaj Finance FD.
In case you’d like to know the maturity amount before deciding to invest, you can use online FD calculator. You can also compare different fixed deposit schemes using the FD calculator.