Guaranteed Return Plans

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    Everyone wants a financial security nowadays but is it the main concern with middle class people. So investment has become the most important concern. When thought about investment it is generally talk about equities and stock markets. But, the risks of playing the stock market are just as great as the rewards are.

    Broadly speaking, there are two major reasons for investing in stable, limited return investment options:

    1. Short term (usually in the margin of 2-5 years) goals only involve capital protection and any return on capital, however meagre, is generally incidental.
    2. Long-term (usually 10-20 years or more) goals usually involve and investments for this purpose focus on enhancing value while staying ahead of the inflation curve.

    Insurance Plans with Guaranteed Returns

    Below are the insurance plans which provides you with gurantedd returns.

    1. Fixed Deposits.
    2. Mutual Funds.
    3. Endowment Insurance Plans.
    4. Post Office Schemes.

    1. Fixed Deposits

    Fixed Deposits offer an opportunity to the investors to put their money into an account with a higher interest rate as compared to regular savings accounts. The interest rates vary between 4% and 11% depending upon the banks. The maturity period can vary anywhere between 7 and 45 days and go up as high as 10 years also depending upon bank. FDs also offer investors income tax and wealth tax benefits. However, earnings garnered from an FD account are not tax-free and is taxed according to the income tax slab of the depositor.

    2. Mutual Funds

    Mutual funds are risk guaranteed return investments. However, the fact is that there are certain mutual fund options, which do provide stable and in some cases fixed return on investment. However, the returns are on the lower side.

    • Monthly Income Plans – Under these plans, investors receive a regular monthly income in the form of dividends. The rate of return generally fluctuates between 8% and 9%. The rates vary according to different service providers.
    • Systematic Withdrawal Plan – Similar to the MIP, the Systematic Withdrawal Plan allows investors to withdraw and sell a fixed number of mutual fund units on a periodic basis. This is a relatively riskier way of generating regular income but is a much safer bet than equity.

    3. Endowment Insurance Plans

    Endowment plans are generally issued by insurance carriers and combine life insurance benefits along with a modified savings scheme. These contracts are designed to provide lump-sum maturity benefits at the end of the policy term or upon the death of the life insured. Policy terms are usually limited to 10, 15 and 20 years and certain plans also provide assured payouts against the sum insured at critical life stages. In some cases, the insurer also declares yearly bonuses, which however do not compound. Therefore, return on investment is generally low but such plans do offer stable returns.

    4. Post Office Schemes

    There are multiple options in term of post office savings investment schemes. They have varying tenures, tax benefits and interest rates but generate a lower rate of returns. However, your money will always be free of risk and secure under these schemes. Post office schemes are perfect for long-term investors who are not particularly concerned with major returns. Some of these schemes are:

    Kisan Vikas Patra (KVP)
    Public Provident Fund (PPF)
    Post Office Monthly Income Scheme (POMIS)
    National Savings Certificate (NSC)
    Post Office Term Deposit (POTD)