How To Invest To Receive Guaranteed Returns

Saving money through smart investments is crucial for achieving your family’s financial goals. Most of us resort to a mix of investment instruments in the hopes of building a balanced portfolio. We invest in gold, stocks, funds, property, fixed deposits and then… we wait.

We wait for the value to rise, the market to enter a bullish phase and no matter how many financial experts we talk to, there’s always a looming uncertainty. That’s why I’m going to delve into an investment that guaranteed returns and demands very little effort all without ever putting your principal at risk.

I’m not suggesting a one size fits all investment strategy. It is always wise to have multiple investments for both wealth creation and as a savings instrument to hedge against inflation. So, take this story with a tiny pinch of salt.

Before we jump into the numbers, let me put some assumptions on the table to ensure this applies to most Indian families. We’ll assume you have a family of four – you, your wife and your two kids. Next, we’ll make the assumption that both you and your wife work and collectively bring home around Rs. 20 lakhs annually and invest around Rs.30,000/month.

Keeping the above assumptions in mind let’s look at some investment instruments you’re either already invested in or have considered as investment and saving options.

Fixed Deposit

Earning through Fixed Deposits is a popular investment avenue. While this option instigates assured returns, the taxation policy attached to it is a major disadvantage. Also, in addition to the near zero flexibility the FD route brings, you are also at the risk of encountering a deduction in the interest or incurring a penalty fee in case of an early withdrawal. Despite that this a reasonably safe savings method and here’s what the return on your investment would look like:

Investing In Gold

So, a Fixed Deposit isn’t exactly impressive but it’s still better than letting your money sit in a low interest savings account. What about gold then? Well, the days when gold was considered a perfect hedge for inflation are far behind us.  Nowadays, gold fares poorly when compared to real estate or stocks in a comparison based on inflation-adjusted returns.

The tax-free status of this asset adds to its attraction but again, the decreased exchange value may prove to be a con here. Moreover, in order to safeguard your investment, you will need to store your gold and incur additional bank charges, locker charges etc.

After all that work, here is the extent of your money’s growth:

Investing In Stocks

Here’s what is generally considered a wise move. Investing in stocks can be really rewarding in the long run but, it is important to consider the cons of this investment avenue as well. To avoid risks, you will need to analyse a stock before you pick the right one.

Lack of knowledge in this sector can turn out to be an extremely costly mistake, so most of us rely heavily on experts and wealth managers. Moreover, the volatility of the share market is a major hindrance in building wealth through this route. Let’s be positive and assume that when you invest the markets have a reasonably good run. Here’s what your annual investment may give you:

Investing In Cashback

Most of us look at cashback as just a cherry on top of discounts when we are shopping. This is true for websites that offer cashback only on a limited set of products or incentivize users with cashback only when they spend on a low interest category.

However, there are many sites that give you cashback on almost everything you buy regularly. Many Indians are already investing in cashback – although they may not be cognizant of this fact. Investment in this world actually entails purchasing products for your household – things you anyway need to buy.

Moreover, if you have high household expenditure you will actually earn a lot more than most people. In this scenario your principal is never at risk because you get useful products of your choice immediately. So your money is always safe and can never go down in value.

For Example: If you spend Rs. 10,000 on household items like soap, shampoo, sugar and regular ration you earn an average of 5% Cashback by shopping on websites like Amazon, Flipkart, BigBasket etc. via a full-fledged cashback site. Which translates into an annual return of Rs. 6000 in the form of cashback.

Here’s a table to illustrate what the same Rs. 3.6 lakh would give you if you smartly invest it by shopping through a cashback site for your monthly recurring needs:

Of course, it is ideal to have a balanced investment portfolio but, if you’re someone who wants a low risk investment & savings method which guarantees returns then Cashback is an avenue you must explore. So, as you think of investing in stocks, funds & gold don’t forget to add Cashback to the mix.

*Average Cashback figures taken from CashKaro.com- India’s largest cashback and coupons site

The author is the Co-founder, CashKaro.com.