Risk Free Investment: Generate Highest Risk Free Return

All investment options carry risks, ranging from market risk, taxation risk, legislative risk, liquidity risk to interest rate risk. While the level and type of risk can vary, every investment comes with a certain risk level.If you’re about to start investing, it is essential to understand this risk factor so that you can select options that best match your risk appetite. You should focus on creating a balance between risk and returns to make the right investment decision.So, what are the investment options that come with the lowest level of risk and high earning potential? Here are three of the best options-

If you're looking for no risk or low-risk investment, debt mutual funds are an excellent choice. These funds invest your money in debt assets that generally generate fixed or more predictable returns. Moreover, the assets in which these funds invest are rated as per the regulatory norms of SEBI so that you can select the safest options.On average, long-term debt funds can generate up to 12% returns in a year. Short-term debt funds generate 9% returns on average. Moreover, with SIP (Systematic Investment Plan), you can start investing in a debt fund with as little as Rs. 1,000/month.

Another great option if you’re aiming for long-term investment is stocks of blue-chip companies. While equity investment is always a risky affair, blue-chip stocks are significantly safer than mid-cap and small-cap stocks.Moreover, many of these blue-chip companies also regularly pay dividends that can function as an extra source of income for you. If you go with this option, prefer investing in blue-chip stocks trading at a price below their intrinsic value.

If you’re looking for how to invest risk-free, another great option is Fixed Deposits (FDs) . Their risk-free nature has made them one of the most popular investment options in India. It requires you to invest a lump-sum amount for a fixed duration. In return, you earn a fixed interest rate. FDs are free from any kind of market-related risks.However, the interest rate has fallen in the last few years. As a result, the returns are generally lower than what a debt fund or value stocks can deliver on average.

As mentioned in the beginning, the right investment vehicle for you is one that best matches your requirement. So, if investing in equity is an ideal choice for a relative or friend, it might not be the best choice for you and vice versa.You should try to understand your investment objective and risk appetite to choose a risk-free investment option that can help you generate competitive returns.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.