"Safeguard Your Investments: Explore Secure Options Beyond Traditional Fixed Deposits"
Ashish Nariya
Data Analyst - Estimates at S&P Global || Business Valuation and Financial Modeling || NISM-Series-XV: Research Analyst
When it comes to exploring safe investment options, there are several avenues you can consider. One popular choice is investing in bonds and fixed deposits.
These options provide stability and predictable returns over time. However, it's important to approach fixed deposits intelligently by timing them according to inflation rates.
While fixed deposits can be profitable, it's crucial to exercise caution, particularly when considering small regional cooperative banks. These banks may offer higher interest rates than traditional fixed deposits, but they also pose a higher risk. Recent cases such as Yes Bank and PMC Bank have highlighted the potential dangers associated with such institutions.
To mitigate risks, it is advisable to avoid investing in cooperative banks with high fixed deposit returns. Instead, opt for banks that are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) for amounts up to Rs 5 Lakhs. Furthermore, consider splitting your savings account deposits among different family members to ensure maximum coverage.
Another safe investment option to explore is treasury bills or bonds. These are government-issued securities that offer relatively secure returns. Treasury bills, in particular, are considered safer than fixed deposits since they are controlled by the government. However, it's worth noting that liquidity can sometimes be an issue with treasury bills, especially if personal circumstances change and you need to trade them on the secondary market.
Recommended by LinkedIn
Corporate fixed deposits are another avenue to consider, as they often provide more flexibility and better yields compared to bank fixed deposits. Good corporates with strong credit ratings and specified lock-in periods can offer stability and transparency. Before investing, it's important to assess your risk profile and determine whether equities or corporate fixed deposits align better with your financial goals.
Investing in corporate bonds of reputable companies is another option worth exploring. When considering corporate bonds, it is essential to check the credit rating of the issuing company and compare it with other firms in the market. It is generally advisable to avoid businesses with heavy capital or infrastructure requirements, as well as small finance banks, as they may carry higher levels of risk.
Lastly, it's worth noting that historically, equity investments have provided higher returns compared to gold. Gold prices have not performed well as a long-term investment class, making equity a more favorable choice for potential returns. However, it's crucial to conduct thorough research and consider your personal financial circumstances before making any investment decisions.
Remember, always consult with a financial advisor or conduct extensive research before making any investment choices to ensure they align with your specific financial goals and risk tolerance.