Safe investing has always been considered an option for the retired people. But I think that this approach towards safe investing is not justified, safe investing options can also be used by young professionals to manage their savings. These days you will several young professionals earning a big fat cheque doing their job five days a week, busy for nearly 14/16 hours a day and has no time for investing even on week days. These same young individuals will rather opt for safe investing than take the risk of stocks investing. These individuals will rather invest their savings is safe investing options like fixed deposits, companies deposits, public/employees provident fund, bonds etc. A young executives has desire to save but they do not have time to do research on evaluation of stocks etc, instead the go for safe investing. On the other hand a retired individual will invest more for monthly income and thus they choose safe investing options. Retired people need monthly income to meet their daily expenses, while young opts for safe investing options to save money for their rainy days. In India the best safe investing option if bank fixed deposits which account for total 68% of total debt linked investments.
Safe investing is done by investors who are not ready to take risks and invests more for safety of principal. Another principal of safe investing is to maintain the portfolio as simple as possible. The golden days of safe investing fans were during post 2008 global market turmoil where deposits were even fetched 12% returns per annum. On the negative side, post 2008 global recession, the inflation figures in India has maintained their double digits levels for almost a year now. In such situations investors having faith on safe investing principles feels demoralized. Inflation figures stayed in the range of 10% to 12% giving negative returns to investors. To speak the fact, an bank deposit which pays 8% interest per annum when inflation is at 10% levels, the investors are at complete loss.
The safe investing options available with investors are:
- Fixed Deposits schemes of Banks
- Debt Linked Mutual Funds
- Post Office Saving Options
- National Savings Certificate (NSC)
- Bonds issued by Government of India
For a retired individual who has received retirement benefits in the form of lump sum money. For them investing in above listed safe investing option is more for monthly income than for capital appreciation. Retired individual needs more funds for medical, weddings, and possible for vacations. There are also some senior citizens savings investment schemes which give annual reruns of 8.5% every quarter. The returns are almost assured; making it a hit among retires peoples. These schemes have a lock-in period of 5 years which can be further extended.
Few Other Safe Investing Options for retired people and for young executives are as listed below:
- Monthly Income Pans (MIP) of Post Office
- Companies Fixed Deposits
- Fixed Maturity Plans (FMP) by mutual funds
Conclusion
Even the biggest of investor at a certain stage of investing would like to opt for safe investing. In US a survey has shown that almost 30% of all investors would like to follow save investing principles. Stocks and real estate investing is good but it is bets for passive investors to diversify their portfolio evenly between risky and safe investing options
These safe investing tips for young investors might be too safe. They do not offer much in capital appreciation and for the time it takes for them to appreciate the money could have gone elsewhere.
If we’re talking safe for young people I would recommend ETF’s that mimic sectors or the broad market. In addition, DRIP accounts with huge blue chips that pay dividends are great and safe investments for young investors.
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