Risk Free Investment Options in India

In India, there is a wide range of investment avenues that can provide favorable returns. However, determining the “best” option depends on an individual’s specific requirements and risk tolerance. Various investment choices cater to different goals and needs. Government-backed instruments are particularly favored by Indian investors due to their perceived safety. Below are some of the most popular risk-free investment options available in India.

8 Risk Free Investment Options

Below is the compilation of safe investment options in India:

  1. Bank Fixed Deposit (FDs)
  2. Public Provident Fund (PPF)
  3. National Pension Scheme (NPS)
  4. Gold
  5. 7.75% GoI saving bonds
  6. Recurring Deposit (RD)
  7. National Savings Certificate (NSC)
  8. Post Office Monthly Saving Scheme (POMIS)

Bank Fixed Deposits (FDs)

Bank fixed deposits (FDs) are indeed one of the safest investment options in India, given their almost negligible instance of bank defaults. Moreover, they offer higher interest rates in comparison to regular savings accounts. Additionally, investing in 5-year tax-saving FDs falls under Section 80C of the Income Tax Act, enabling investors to deduct up to Rs 1,50,000 per year. It is worth noting that senior citizens enjoy slightly higher interest rates on these FDs. The interest rates on FDs tend to vary based on factors such as investment tenure, amount, residential status (NRI or not), and the specific bank chosen. Furthermore, it’s essential to be aware that FDs come with a lock-in period, and withdrawing funds prematurely can result in penalties in the form of deducted interest. Lastly, it’s worth mentioning that besides banks, other financial institutions also provide FD options.

Key features of bank deposits:

  • Assured returns over time
  • Ideal for risk-averse investors
  • Partial withdrawals and loans against the balance are available.

Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a government-backed investment scheme with a lock-in period of 15 years. It is considered one of the safest investment options due to the sovereign guarantee provided by the government. Similar to bank FDs, PPFs offer significantly higher interest rates compared to regular savings bank accounts.

Key features of PPF:

  • Ideal for long-term financial goals, as it has an extended lock-in period of 15 years.
  • PPF investment is not subject to market fluctuations, ensuring assured returns over time.
  • At maturity, investors can choose to redeem the entire corpus or extend the account for another five-year block.

National Pension Scheme (NPS)

NPS (National Pension System) is a government-backed retirement scheme overseen by the Pension Fund Regulatory and Development Authority (PFRDA). In addition to this oversight, it combines several investment options, such as liquid funds, fixed deposits, and corporate bonds. Moreover, NPS offers various schemes to cater to different individual requirements, each coming with different interest rates.

Key features of NPS:

  • The scheme is accessible to employees from all sectors.
  • Tax deductions of up to Rs 2 lakh per year are available under the provisions of the Income Tax Act, 1961.
  • Investors have the flexibility to choose between an auto or active method for managing their investment portfolio.
Risk free investment options in India


Gold investment is a conventional and cherished form of investing for Indians. It involves acquiring physical gold in the form of jewellery, coins, or bars. Additionally, gold investments can be made through gold ETFs (Exchange-Traded Funds) and sovereign gold bonds.

Key features of gold investment:

  • Investing in gold serves as a hedge against inflation, safeguarding against the eroding value of money.
  • As gold prices tend to move inversely to stock markets, it offers protection against potential stock market declines.
  • Gold is known for its relatively stable price over time, providing investors with the advantage of capital preservation.

7.75% GoI Savings Bond

The 7.75% GoI Savings Bonds were introduced in 2018, replacing the previous 8% savings bond. As the name implies, these bonds offer investors an annual interest rate of 7.75%. Investors have the flexibility to start investing with a minimum amount of Rs 1,000.

Key features of 7.75% GOI Savings Bonds:

  • The bonds provide capital protection as they are backed by sovereign guarantees.
  • Investors can expect a guaranteed rate of return at 7.75% per annum.

Recurring Deposit (RD)

Recurring Deposit (RD) serves as an alternative to Fixed Deposits (FDs) wherein individuals invest a fixed sum regularly. Like FDs, RDs also offer higher interest rates compared to regular savings bank accounts. RD investments can be used as collateral to obtain secured loans. Besides the investment avenues mentioned, other popular options in India include National Savings Certificate (NSC), stock markets, and real estate.

Key features of RD:

  • Investing in RD for an extended period fosters financial discipline over time. Moreover, it cultivates a habit of consistent saving and investing.
  • RDs allow investors to commence their investment journey with a small initial sum, thereby eliminating the need for a large upfront investment. Furthermore, this makes it accessible to a wider range of investors.
  • Assured returns are provided over time as RDs are not influenced by equity market fluctuations. Consequently, investors can rely on a stable and predictable growth of their investment without being impacted by market volatility.

Comparison of Safe investment options:

InvestmentReturn PotentialRisksSuitable for
Bank DepositsMediumNilRisk-averse investors
PPFHighNilRisk-averse investors
RDLowNilRisk-averse investors
GoI Savings BondsHighNilAll

National Savings Certificate (NSC)

NSC (National Savings Certificate) is a government-backed fixed income investment scheme accessible at banks and post offices. Additionally, investors can start with a minimum investment of INR 1,000. Subsequent deposits can be made in multiples of 100 in 12 installments or as a lump sum, providing flexibility to investors. The interest is paid at the end of the maturity period, which is determined by the Ministry of Finance. Moreover, NSC has a lock-in period of 5 years, during which investors cannot withdraw their funds. Furthermore, investments up to INR 1,50,000 qualify for tax deduction under section 80C, making it an attractive option for tax-saving purposes.

Also read: Mutual Fund gains taxation in India

Post Office Monthly Income Scheme (POMIS)

The scheme is favored among domestic households seeking to generate passive income due to the fact that the Indian postal service provides multiple account options, catering to single, joint, guardianship, or minor/person of unsound mind scenarios. The minimum investment amount is INR 1,000, while the maximum balance allowed is INR 4.5 lakhs for single accounts and INR 9 lakhs for joint accounts.

Also read: Smart methods to utilize your Tax refund

The Bottom line

As investors seek stability and security in their financial journey, the range of risk-free investment options presented in this blog becomes an invaluable resource. Moreover, these investment options offer a sense of certainty and confidence for investors. Whether one prefers traditional fixed-income instruments like Bank FDs and PPF for long-term financial goals or explores modern avenues like NPS and gold investments to hedge against inflation and market fluctuations, the variety of choices caters to every risk appetite. Moreover, with this knowledge, they can make informed decisions and create a solid investment strategy. Embracing risk-free investments offers not only assured returns but also peace of mind, ensuring a solid foundation for a prosperous financial future.

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