Lock-in free investment options: A list
What's the story
In today's fast-paced world, having a steady source of passive income is more important than ever. For beginners, especially in India, there are a number of investment options that don't require a lock-in period. These options not only provide liquidity but also the chance to grow your money over time. Here are five beginner-friendly passive income ideas that you can explore without worrying about lock-in periods.
Tip 1
High-interest savings accounts
High-interest savings accounts offer a better interest rate than regular savings accounts. They are ideal for those who want to keep their money liquid while earning some interest. Most banks in India provide these accounts with minimum balance requirements and no lock-in period. The interest is usually calculated daily and credited monthly, giving you a steady stream of passive income.
Tip 2
Fixed deposits with flexible tenures
While fixed deposits are usually associated with lock-in periods, some banks offer flexible tenure options. These allow partial withdrawals or premature closure without hefty penalties after a certain period. This way, you can enjoy the benefits of fixed deposits' higher interest rates while maintaining access to your funds when needed.
Tip 3
Liquid mutual funds
Liquid mutual funds invest in short-term debt instruments and provide higher returns than traditional savings accounts or fixed deposits. They have low minimum investment requirements and no lock-in periods, making them ideal for beginners looking for quick access to their money. The returns from liquid mutual funds are usually better than inflation rates, providing a good passive income source.
Tip 4
Public Provident Fund (PPF) partial withdrawals
The Public Provident Fund (PPF) is a long-term savings scheme with tax benefits and attractive interest rates. Although it has a 15-year lock-in period, partial withdrawals are allowed after the completion of the sixth financial year. This way, you can access a portion of your investment without closing your account completely.
Tip 5
Recurring deposits with flexible options
Recurring deposits (RDs) let you invest a fixed amount every month for a specified tenure at a predetermined interest rate. Some banks also offer flexible RDs, where you can choose to withdraw prematurely after six months or one year without penalties. This way, you can enjoy regular interest earnings while keeping your investment liquid.