To make our future better and secure, we all need a safe investment option that gives fixed returns after a certain period. There are many mutual funds and government schemes available in the market, but the investment option we are going to tell you about today is considered the best.

The first reason for this is that it has a high interest rate and there is no risk. So, if you also want to earn good profits by investing your hard-earned money in a safe place, then Reserve Bank of India (RBI) bonds can prove to be a great option for you.

Why is it better than bank FD, post office, and PPF

Here we are talking about RBI bonds issued by the Reserve Bank of India. This is a great way to accumulate more funds in the long term. It is also considered better than bank FD, post office scheme, and PPF, because RBI bonds give the highest profit among all other fixed income schemes.

And when it is being issued by the Reserve Bank itself, there is no need to worry about security. In this, a fixed rate of return is given on the deposited amount. RBI bonds introduced in 2003 are also known as Government of India Savings (Taxable) Bonds or Floating Rate Saving Bonds! It can give wings to your investment.

Why is the RBI bond the safest and most profitable way of investment

RBI bonds are considered a great way of investment because, while PPF or bank FDs give a 7-7.25 percent interest rate, RBI bonds give 8.05 percent interest. There is a rule to review the interest rate twice a year. Currently, the interest rate is 8.05 percent.

Another big feature of this is that it is less affected by market fluctuations. Being issued by the government, it is considered the safest investment. So, if you want to get good returns without any risk, then RBI bonds are a great option for you.

7-year lock-in period, but the profit will be tremendous

However, the lock-in period in RBI bonds is 7 years. If you redeem RBI bonds before this, you may have to pay a penalty. As per the interest rate of 8.05 percent, by investing ₹ 5 lakh in RBI bonds for 7 years, the maturity amount will be more than ₹ 8.5 lakh (₹ 8,59,693).

That is, there will be a profit of more than ₹ 3 lakh in the form of interest only. Another special thing about this is that the interest rate is paid twice a year, on 1 January and 1 July. You can start investing in RBI bonds from ₹ 1000. There is no upper limit to this. Transactions are done only online. This is a great opportunity for long-term investors.

Keep these important things in mind while investing

However, while investing in RBI bonds, it is important to note that the interest earned in them is taxable, whereas this is not the case with PPF. The second important thing is its long lock-in period. You cannot invest in it for 1 or 2 years. However, senior citizens can redeem the bond prematurely.

The lock-in period for people aged 60-70 years is 6 years, for people aged 70-80 years, the lock-in period is 5 years, and for people above 80 years of age, the lock-in period is 4 years. Nominee facility is also available in it. In the case of the death of the person buying the bond, the money will be transferred to the nominee. Therefore, it is important to keep these things in mind before investing.

How to buy RBI bonds

To buy RBI bonds, you have to apply at the nearest bank branch or online. You can open an RBI Floating Rate Savings Account by visiting the bank. For this, you will need a PAN card, an Aadhaar card, a passport, and a cancelled cheque.

You have to fill in all the details in the form and submit it to the bank along with the documents and a passport-sized photo. Nowadays, many banks also provide this facility online, so that you can easily invest from home.