Are You A Conservative Investor? Here Are Best Investments For You
Last Updated: 9th December 2022 - 02:19 pm
Financial market investors are classified based on risk appetite. Risk appetite is the amount of risk an investor is willing to take while investing. An investor’s risk profile can be conservative, moderate, moderately aggressive or aggressive.
Who are Conservative Investors?
Conservative investors are those who are low-risk takers. Such investors give high priority to safety of their investments and are happy with nominal returns. If you are one of them, read on to know which financial instruments are ideal for you.
Some of the investment options that offer capital protection with moderate returns are:
| Assets | What They Are | Offered By | Maturity | Expected Returns |
|---|---|---|---|---|
| Bank FDs | Financial instrument which allows people to deposit sums of money for fixed periods of time | Any nationalised or cooperative bank | 5 years | 6-7.5% p.a |
| Recurring Deposits | Allows people to deposit fixed amount every month for a pre-defined period which earns interest similar to FDs | Post office or banks | 5-10 years | 7-7.5% p.a |
| Corporate FDs | A deposit invested in a company for a fixed period of time. deposited earns a prescribed rate of interest | Corporate | 12 months-5 years | 8.25%-8.90% p.a |
| PSU Bonds | Debentures or fixed income instruments issued by public sector undertakings | PSU companies like SAIL, REC, PFC NTPC etc. | 5-10 years | 7-7.5% |
| PPF | Popular long-term investment option backed by Govt. Returns are fully exempted from tax | Post office and nationalised banks | 15 years | 8.70% p.a |
| Sukanya Samriddhi Scheme | Small savings scheme started by Govt to encourage people to save to fund their girl child’s higher education and marriage expenses. Can invest minimum deposit of Rs 1,000 and maximum of Rs 1.5 lakhs in a year | Post office and nationalised banks | Age of 21 years | 9.20% p.a |
| Debt Mutual Fund | Invests in a mix of debt or fixed income securities such as treasury bills, government securities, corporate bonds, money market instruments and debt securities of different time horizons | Mutual fund companies | No maturity | 8-8.5% |
Conclusion - Identifying risk profile enables individuals pick the best suited investment instruments and take calculative risk. All the conservative investors out there should explore the above mentioned investment assets and see which route is the most efficient and meets their investment objectives. Or, they can also approach a financial advisor to design a customized plan for them.
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5paisa Research Team
Tanushree Jaiswal
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.