What is the Best Investment to Make with Guaranteed Returns?

Multiple investment options can promise you guaranteed returns in the long run. But to keep the answer as simple as possible for you, I would suggest the two best options I can think of:

Public Provident Fund (PPF) and Guaranteed Return Insurance Plan.

Public Provident Fund(PPF)

It is one of the most popular and easy options for your savings. It is a fifteen-year deposit account. You will have to open a PPF account with a designated bank or post office.

You can make a yearly investment from a minimum of Rs. 500 to a maximum of Rs. 1.5 lakhs. The rate of interest ranges from 6 to 8%, and the interest gained is exempted from tax.

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One of the best things I liked about this option is the minimum amount. An earning person can easily deposit the minimum amount in bank and enrol himself in the PPF scheme.

Guaranteed Return Insurance Plan

It is a life insurance investment type of plan which helps you to meet your medium to long term goals in life. It helps in securing events such as child education, marriage, retirement planning, etc.

I had purchased the Guaranteed Return Insurance plan from Tata AIA around 2 years ago. It allows you the flexibility to choose between Endowment, Regular Income or Whole Life Income. You can also enhance your protection with optional riders and enjoy the benefits of tax-free investments. Thus in one go, you get both investment plus life insurance.

Do make sure that you read all the terms and conditions of the plan you choose before making any investment.

Public Provident Funds (PPF) is a retirement plan for those individuals which do not cover under EPFO or self-employed. It is a 15 years deposit account. A person can open a PPF account with a designated bank or a post office. A person can invest a minimum of Rs 500 and maximum of Rs 1.5 lakh per year. There are many merits and demerits of investing in PPF that one should consider before investing in PPF.

A small saving scheme

A minimum of Rs 500 is allowed to invest in a PPF account which is a very small amount. A person can invest in monthly, quarterly or semi-annually instalments, or in a lump sum once a year.

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EEE status

PPF is an excellent retirement plan and one should definitely invest in it for retirement planning. The primary benefit of investment in PPF over similar pension schemes is Exempt- Exempt- Exempt status (EEE). Investments, interest earned and withdrawal at maturity is not taxable in PPF.

Fixed Return

The interest rate is fixed and compounded yearly. The interest rate is decided once a year. However, since the returns are not market linked, in a high inflationary scenario it may not beat inflation.

Tenure is quite long and withdrawals are allowed after 7 years

The investment tenure of PPF is quite long, 15 years. However, after 7 years a withdrawal is allowed every financial year. A maximum 50% withdrawal is allowed of the balance at the end of the fourth year or immediate preceding year, whichever is lower. After completing the 15 years, a person can close the account or he can continue in a block of five years.