People generally think that investing means subjecting yourself to either high-risk investment mediums or investing in the conventional instruments.

In fact, whenever you receive a particular sum of money, 3 options come to your mind.

  • Savings account
  • Fixed deposit
  • Recurring deposit

Agreed that these are low-risk investment options, but do they give good returns?

Let’s figure out with a help of an example. 

Suppose you invest Rs. 1000 in above three investment mediums.

1.Savings Account: On an average, a savings bank offers a return of 4% in a year. Hence, with 3 years compounded return, your money would grow to ₹1112.

2.Fixed Deposit: For most of the banks Fixed Deposits offers a return in a range of 6.5%-7%. Taking 7% as an optimistic approach, our money would have grown to approximate ₹1122 with 3 years compounded.

3.Recurring Deposit: Average return from Recurring Deposit again hovers around 6.7-7.25%. Taking 7.25% as an optimistic approach, our money would have grown to ₹1124 with 3 years compounded.

As you see, the returns are not very high.

The good thing in today’s day and age is that you have various investment options available, which are not high in risk, but  provide decent returns.

Let’s check out the 5 best options.

1. Debt Mutual Funds

Mutual funds are the right way to invest for new investors as they allow us to invest in a portfolio of stocks and bonds.

The best part about a mutual fund is that investors need not worry about knowledge of which stock and bond to put money in, which one to hold, which one to sell etc.

Debt mutual funds are low risk, but provide better returns as compared to fixed deposit or a savings bank account.

Best Debt Funds - 2019: At a Glance
Fund Name 1Y 3Y 5Y Expense Ratio Turnover Ratio Category Risk
Axis Liquid Fund - Direct - Growth 7.59% 7.32% 7.87% 0.11% NA Debt
Indiabulls Liquid Fund - Direct - Growth 7.5% 7.38% 7.96% 0.1% NA Debt
L&T Short Term Bond Fund - Direct - Growth 7.6% 7.74% 8.52% 0.22% NA Debt
(Short Duration)
Moderately Low
Franklin India Low Duration Fund - Direct - Growth 9.16% 9.27% 9.64% 0.42% NA Debt
(Low Duration )
ICICI Prudential All Seasons Bond Fund - Direct - Growth 7.21% 10.47% 11.03% 0.6% NA Debt
Kotak Money Market Scheme - Direct - Growth 8.03% 7.46% 7.97% 0.16% NA Debt
Principal Cash Management Fund - Direct - Growth -1.72% 4.16% 5.97% 0.1% NA Debt
Franklin India Ultra Short Bond Fund - Direct - Growth 9.23% 9.07% 9.39% 0.35% NA Debt
(Ultra Short Duration)
HDFC Short Term Debt Fund - Direct - Growth 7.54% 7.86% 8.57% 0.25% NA Debt
(Short Duration)
Moderately Low
Aditya Birla Sun Life Short Term Opportunities Fund - Direct - Growth 7.58% 8.55% 9.18% 0.43% NA Debt
(Short Duration)

Also Read: Can You Invest With Rs. 500 in Mutual Funds?

2. G-Sec Bonds

These are government bonds offering around 8% return.

The lock-in period can be from 91 days to as long as 40 years. Government bonds are ideal for people seeking  long term investment.

They offer much better returns than bank fixed deposit. The minimum amount is, however, ₹10,000, but they offer the safest bet for returns as one receives a constant cash flow of coupons based on the terms and condition in the initiation of the government bond.

Government Security or G-Sec is backed by the government, thus the chances of a bond defaulting is very less.

Also, read: Why are debt funds better than fixed depsits

3. Post Office Monthly Income Scheme (POMIS)

Post office Monthly income scheme is a special investment plan by the post office of India and this plan gives around 7.3-7.8% return.

The payment has to be done monthly and the interest payable is also on a monthly basis. The minimum amount required to do such investments is as low as ₹1,500.

The maturity period is 5 years and there is also a facility for a nominee. The account can be opened at any post office and hence it is accessible everywhere in India.

4. Unit Linked Insurance Plans (ULIP)

Budget 2019: A budget like never before

ULIP is a special kind of life insurance which is a combination of insurance as well as an investment portfolio.

The premium is divided into two parts, the first part goes to the insurance cover while the second part is invested same as the mutual fund. Again, the investment can be in debt or equity, according to the choice of the policyholder.

ULIPs provides good returns.

The minimum ticket size of ULIP is ₹1200 – 1500 for some companies, while for some other companies the minimum ticket size is ₹5000.

5. Public Provident Fund (PPF)

PPF is a special kind of investment scheme which is backed by the government and at the same time gives an attractive interest rate of 8%.

Even when bond yields were low and returns from government bonds were suboptimal, PPF guaranteed a return of 8% annually.

PPF is a long term investment option. The minimum amount of investment is ₹500.

The biggest advantage of this investment is that the capital gain is tax exempted. We can also prevail facilities like getting loans, withdrawal and extension of account.

Other Volatile Options?

Investing 10,000 for 10 years in mutual funds

Other options would be investing in high-risk mutual funds or stocks where the returns are obviously more, but the risk is more as well.

Investing a small amount may need rounds of re-investments to grow money. The most important aspect of investing in equity investments is we need to keep a constant watch on the market.

Hence, equities need active management to enjoy higher potential returns.

Another option is investing in the international currency market. The returns are subjected to global trade and economies of countries.

Also, read: Strategies for investing in Stocks 

Investment in gold can also be considered. If there is an inflation in the economy or even if the Indian rupee is declining, gold price tends to soar high.


If you thought that investing in financial instruments is for the rich, then you’re wrong.

These investment instruments deliver good returns and they are apt for beginners or even individuals with limited funds.

Happy Investing!

Disclaimer: The views expressed in this post are that of the author and not those of Groww