What Are the Best Fixed Income Investment Options?

Income Investment

If you want your savings to grow steadily while ensuring the safety of your investment. This is where fixed-income investment options come into play. Fixed-income investments offer a reliable and predictable stream of return on a fixed schedule. These investments are especially popular among retired individuals who seek stable income sources.

Some common forms of fixed-income investments include individual bonds, bond funds, post office savings schemes, company deposits, certificates of deposit, exchange-traded funds (ETFs), and money market funds.

The Benefits of Fixed Income Investments

Fixed-income investments provide several advantages that make them an attractive option for investors. Let us explore some key benefits:

Safety: Fixed-income investments are generally considered low-risk options as they offer a steady income stream and are less susceptible to market volatility compared to equities or derivatives.

Stability: These investments focus on generating fixed income rather than capital appreciation. This stability makes them ideal for risk-averse investors who prioritise consistent returns over high-risk, high-reward opportunities.

Liquidity: Fixed-income investments are highly liquid, allowing investors to access their funds whenever needed without major penalties or restrictions.

Diversification: Including fixed-income investments in your portfolio can help diversify risk by balancing out the potential losses from other asset classes like stocks or real estate.

Tax Benefits: Some fixed-income investment options come with tax benefits that can help reduce your overall tax liability and increase your post-tax returns.

Government-Backed Fixed Income Investment Options

These options offer a perfect blend of safety, liquidity, and attractive returns. Let’s explore them:

Public Provident Fund (PPF): It is one of the most popular long-term investment schemes backed by the Government of India. It offers attractive interest rates and is fully tax-exempt. With a maximum investment limit of Rs.1.5 lakh per year, PPF provides individuals with a safe and tax-efficient way to grow their wealth.

Voluntary Provident Fund (VPF): It allows employees to contribute additional funds towards their provident fund account. This option offers risk-averse investors an opportunity to accumulate long-term wealth in a safe and regulated manner.

Listed PSU Bonds: These bonds are issued by government-backed entities and have a very low risk of defaulting. The interest earned on these bonds is completely exempt from income tax, making it an attractive option for investors seeking steady income streams.

Senior Citizen Savings Scheme (SCSS): Designed specifically for individuals aged 60 and above, SCSS offers higher interest rates compared to other fixed-income options. The scheme has a tenure of 5 years, which can be extended for another 3 years, providing retirees with a regular stream of income.

Pradhan Mantri Vaya Vandana Yojana (PMVVY): Implemented through the Life Insurance Corporation of India (LIC), PMVVY aims to provide social security to senior citizens aged 60 and above. With an assured pension based on a guaranteed rate of return, this scheme offers financial stability during adverse economic conditions.

Sukanya Samriddhi Yojana (SSY): It is a small deposit scheme launched as part of the “Beti Bachao Beti Padhao” campaign. It offers an attractive interest rate and income tax benefits. This scheme is specifically designed for the girl child and can be availed from her birth until she turns 10.

Other Fixed Income Investment Avenues in India

In addition to government-backed options, there are several other fixed-income investment avenues available in India. These options cater to a wide range of investors with different risk tolerances and investment goals. Let us explore some of these alternatives:

Post Office Recurring Deposit: This option allows individuals to make regular monthly deposits for a fixed tenure and earn interest on their savings.

Post-Office Monthly Income Scheme: This provides individuals with a steady monthly income by investing a lump sum amount.

Post-Office Time Deposit: Similar to fixed deposits offered by banks, this option allows individuals to earn fixed returns by locking in their funds for a specific period.

Bank Recurring Deposits: Banks offer recurring deposit schemes that allow investors to save money regularly while earning fixed returns.

Bank Fixed Deposits: Fixed deposits are one of the most popular investment options in India. They offer guaranteed returns at fixed interest rates for a specific period.

National Savings Certificate (NSC): It is a government-backed investment option that offers attractive interest rates along with tax benefits under Section 80C of the Income Tax Act.

Calculate Your Term Insurance Premium

While exploring fixed-income investment options, it is crucial to consider your insurance needs as well. You can buy term insurance as it is an essential component of a comprehensive financial plan and provides financial protection to your loved ones in case of an unfortunate event. To understand how much term insurance coverage you need and calculate the premium amount, you can use a term insurance calculator. This online tool takes into account factors like your age, income, lifestyle, and desired coverage amount to provide an estimate of the premium.


As you embark on your journey towards securing your financial future, fixed-income investment options can offer stability, safety, and attractive returns. Government-backed schemes like PPF, VPF, listed PSU bonds, SCSS, PMVVY, and SSY provide reliable investment avenues with various benefits. Additionally, there are several other fixed-income options available in India that cater to different risk tolerance levels and financial goals.