7 Low-Risk Investments With High Returns for Women in 2023
Often perceived as a trade-off, high returns in investment are often accompanied by a higher level of risk. However, for women seeking to grow their wealth with a lower risk profile, there are a variety of investment options available. This article explores seven low-risk investments that can offer high returns, making it a suitable choice for women looking to diversify their portfolios.
1. Equity Mutual Funds
Equity mutual funds are a preferred investment choice for women who are looking to build a stable and sustainable wealth over the long term. By pooling small amounts of capital from multiple investors, these funds diversify risk and are managed by professional fund managers.
Benefits: Over the long term, roughly 5 years, equity mutual funds tend to provide consistent returns by stabilizing the volatility associated with individual stock investments. This is achieved through the use of Systematic Investment Plans (SIPs), which help in averaging the cost of investments. When the market is high, investors receive fewer units; when the market is low, more units are purchased, leading to potential returns of 10-12% in equity-linked mutual funds.
2. Index Funds
Index funds are a passive investment option that invests in replicating a particular stock market index, such as the Nifty 50 or the Sensex. These funds provide a way for investors to participate in the stock market without having to actively manage individual stocks.
Benefits: Index funds offer a low-expense investment strategy suitable for retail investors with little knowledge of the stock market. Because they are passively managed, the cost to the investor is lower than that of actively managed funds, making them a safer and more cost-effective option.
3. Debt Mutual Funds
Debt mutual funds invest in fixed-income securities such as debentures, government securities, and gilt funds. These funds provide a low-risk, steady income-generating option for investors seeking safety and regular returns.
Benefits: Debt mutual funds are a suitable choice for those prioritizing the safety of their investment over high returns. They offer a steady cash flow and are less volatile than equity mutual funds, making them an ideal investment for women who are risk-averse.
4. Fixed Deposits (FDs)
Fixed deposits are a popular short-term investment option for women seeking capital preservation. While they do not offer high returns, they provide a guaranteed rate of interest and capital protection.
Benefits: Fixed deposits are a safe option with a guaranteed return, making them preferred among risk-averse investors. Although the returns may be lower, they are adjusted for inflation, ensuring a steady financial safety net.
5. Public Provident Fund (PPF)
For women seeking long-term investments with tax benefits, the Public Provident Fund (PPF) is an excellent choice. With a lock-in period of 15 years, PPF offers capital protection and regular returns, making it an attractive tax-saving investment option.
Benefits: PPF is exempt from income tax under the Exempt-Exempt-Exempt (EEE) category, which means no income tax, wealth tax, or gift tax on withdrawals or upon maturity. The guaranteed returns and tax benefits make it a secure and beneficial investment choice.
6. National Pension Scheme (NPS)
For the long-term savings plan, the National Pension Scheme (NPS) is a great option. With unique tax benefits, good returns, and a low-cost structure, NPS is a suitable investment vehicle for retirement planning. It is accessible to individuals starting from the age of 18 and can remain invested until the age of 70.
Benefits: NPS offers a secured future with decent avenues for saving for retirement. It combines the benefits of both government and private pension schemes, providing a unique combination of tax benefits and low-cost management.
7. Exchange-Traded Funds (ETFs)
Exchange-Traded Funds (ETFs) are investment funds traded on stock exchanges, much like individual stocks. While they can mirror the returns of stocks, they offer the diversification benefits of mutual funds.
Benefits: ETFs provide diversification across various assets, including stocks, bonds, and commodities, ensuring a robust investment portfolio. Their low expense ratios make them a cost-effective investment option, and they can be traded throughout the trading hours, giving investors flexibility.
Investors looking for low-risk, high-return options to invest in should consider these seven investment avenues. By diversifying their portfolios, women can ensure a more secure financial future while achieving their wealth-building goals.