what-are-the-best-fixed-income-investment-options

What Are the Best Fixed Income Investment Options?

Fixed income investments provide stable returns with lower risk, making them suitable for investors seeking regular income and capital protection.

Written by : Knowledge Centre Team

2025-11-02

3293 Views

8 minutes read

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The best fixed-income investments generate a steady income source for you and have tax benefits. If you are lucky, you can also enjoy a little bit of capital appreciation. In other words, you are guaranteed a level of ROI on fixed income investments, with an option of earning a bit more.

Such fixed-income investments are most useful when you need a stable source of income. For example, after retirement. These investments will let you turn your large corpus into a regular stream of income.

Even better if you can get tax-free income or deduction on the invested amount.

You have several options for fixed income investments ranging from sovereign bonds to diversified funds. However, not one fixed-income investment is the best for you at any given time. The best fixed-income investment for you would be the one which fits your financial needs and goals.

Here are the parameters you would want to check for selecting the best fixed-income investment for yourself:

  • Risk-Return combination
  • Duration or time to maturity
  • Individual security or portfolio
  • Investment size
  • Ease of investment and withdrawal
  • Tax savings and benefits

You must select fixed-income investment plans depending on your financial goals and needs. Capital preservation is one of the essential aspects of investing in fixed income investment plans. If you are close to retirement or want to invest safely fixed income investments are the best option for you.

How to Select the Best Fixed Income Investment Plan?

Fixed-income investment plans are lower-risk options, but the approach is not risk-free. You can follow the below steps to select the best fixed-income saving and investment plan for yourself:

1. Tenure:

 Every fixed income investment plan comes with an investment tenure that could vary from a few months to years. You should select a plan with tenure in line with your financial goal.

2. Liquidity:

 Your aim through a fixed income investment plan is to generate a regular income flow. However, you should also factor in the liquidity of your investment. If need be, can you withdraw your investment? You should check the withdrawal process and evaluate whether the premature withdrawal will lead to a penalty. The plan should offer you liquidity or features like a loan against the investment amount.

3. Tax Saving:

 While comparing fixed income plans, you should also look at taxation. The best fixed-income plans are those in which the amount invested is eligible for a tax deduction, and also the income generated is non-taxable.

4. Safety:

 Every investment carries some degree of risk associated with it. You should select a plan that has the least risk and good returns.

Best Fixed Income Investments in India

Below are some of the best fixed-income investment options in India. You can select the ones that help you achieve your financial goals:

  1. Fixed Deposits: These are one of the most secured forms of investment. Fixed deposits offer great flexibility with investment tenure. You can open short and long-term fixed deposit accounts. The amount is locked.
    However, it can be withdrawn before the maturity period but with a penalty.
  2. Government Securities Bonds: These are issued by the central and state governments. The risk is less since the bonds are issued by the government.
  3. Corporate Bonds: When a company wants to raise money from investors for a fixed tenure at a predetermined interest rate, they do it through the corporate bond. A corporate bond's risk depends on the creditworthiness of the issuer.
  4. Guaranteed Plan: In the unfortunate event of your death, your family will need a regular income to meet daily expenses. Guaranteed plans like life insurance ensure your family's life is secured financially, and hence you must have them in your portfolio.
  5. Public Provident Fund: PPF is a zero-risk fixed-income investment option that gives you higher returns than regular savings schemes. The invested amount is eligible for a tax deduction, and the accumulated amount and interest are also exempt from tax at the time of withdrawal.
reasons to buy saving plan

Risk in Fixed Income Investments

Below are the risks associated with fixed-income investments:

  1. Inflation Risk: Fixed income investment plans provide a fixed amount at regular intervals. However, if the inflation rate gets higher than your return rates, you will lose your purchasing power.
  2. Interest Rate Risk: When the interest rate rises, the bond or other fixed-income investment prices fall. It means your investment in bonds loses value. Interest rate causes price volatility in fixed-income investments.
  3. Credit Risk: With corporate bonds, you take on credit risk with interest rate risk. It is a possibility that the issuer could default on its debt obligation. If it happens, you may not receive the 100% value of your investment.

Fixed Income Portfolio Investment Options

You can overcome the above risks if you opt for fixed-income portfolio investment options. Instead of investing in a single scheme, you invest in a portfolio option that invests in many schemes. It helps you lower your investment risk. Below are some portfolio options:

  • Debt Mutual Funds: These accumulate money from different investors and invest in various fixed income securities such as corporate and government bonds, money market instruments, corporate bonds, etc. These can generate higher returns compared to standard savings schemes like fixed deposits and lower the risk because of diversification.
  • Debt Fund Options in ULIPs: ULIP plans by Canara HSBC Life Insurance give you the option to choose from a range of unit-linked funds, including debt funds. You can invest in them to get a return similar to debt mutual funds, plus tax benefits on the investment amount.
    ULIP also adds bonus units to your portfolio if you invest for more than 5 years and stay invested for more than 10.
  • Life Insurance Plans: 
Other Fixed Income Investments
Post-Office Monthly Income SchemeSavings Bank Account
Bank Recurring DepositsRBI 7.75% Savings Bonds
Sukanya Samriddhi YojanaPradhan Mantri Vaya Vandana Yojana
Senior Citizens Savings SchemeKisan Vikas Patra (KVP)
National Savings Certificate (NSC)National Pension Scheme
Atal Pension YojanaPension and Annuity
Sovereign Gold SchemesCompany Deposits


Fixed-income investment options are ideal for you if you are looking for a safe investment option. If you are wary of stock market fluctuation and looking for a stable investment, consider investing in these plans.

Fixed income investments are great at offering long-term stability to your savings. With fixed income tax saving plans you can save tax while growing your wealth at a steady pace.

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Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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