Investing in financial instruments carries a certain amount of risk. Each instrument has different levels of risk, and not all investors are comfortable with taking on higher levels of risk. For risk-averse investors, it is crucial to find investment options that prioritize capital preservation and provide stability.
More often than not, risk-averse investors are stuck with a limited set of investment options. This gave rise to the need for new-age financial instruments that assure the safety of capital and generate better returns on investment. This is where Smart Deposits come into the picture.
Let’s discuss what Smart Deposits are and how they are an ideal choice for risk-averse investors. However, before that, let’s explore what risk-averse means and what the ideal investment strategy for risk-averse investors should be, with Koshex.
What Does Risk-Averse Mean?
Risk-averse investors prioritize capital preservation and are reluctant to take on excessive risk. They seek investment options that provide stability, minimize potential losses, and prioritize capital preservation over aggressive growth strategies.
Risk-averse investors are often more concerned about the safety of their investment than the return on their investment.
Which Strategy Should Risk-Averse Investors Use?
For risk-averse investors, a conservative investment strategy is most suitable. This strategy focuses on minimizing risk and preserving capital through investments in low-risk financial instruments. The goal is to balance generating modest returns and minimizing potential losses.
In this strategy, the concentration on volatile instruments is low, and investors focus on fixed-income generating instruments. The primary reason is that they are not affected by the market.
What are Smart Deposits?
Smart Deposits are an ideal investment avenue for investors with low-risk appetites. It is a peer-to-peer (P2P) lending product. P2P lending uses online platforms to connect people who want to borrow money with people who want to lend money. When you invest in Smart Deposit through Koshex, Faircent, an RBI-registered NBFC (Non-Banking Financial Company) will lend your money at a certain interest rate to borrowers. When the borrowers pay back the money lent by you, you will receive your principal and the interest amount.
Smart Deposits offer fixed returns, ranging from 8.25% to up to 12%. These deposits are designed to provide investors with the flexibility to withdraw funds without any charges and ensure that they have access to their money when needed. Smart Deposits are considered to be a great alternative to bank savings accounts and fixed deposits.
Why Smart Deposits Are a Perfect Choice for Risk-Averse Investors?
Smart Deposits align perfectly with the investment objectives of risk-averse investors. Here are the key reasons why risk-averse investors should consider Smart Deposits:
Higher Returns: As mentioned above, Smart Deposit offers higher returns than traditional fixed deposits and bank savings accounts. Your investment in Smart Deposit can help you earn anywhere from 8.25% to up to 12%.
Low Risk: Usually, investment instruments that offer double-digit returns come with high risks. However, Smart Deposit carries less risk than direct equities but offers returns that can compete with traditional instruments.
Highly Liquid: Smart Deposits offer high liquidity, meaning investors can easily access their funds whenever needed. This feature provides peace of mind to risk-averse investors. They can quickly and conveniently withdraw their funds in case of unforeseen financial emergencies.
No Lock-in Period: Unlike certain investment options with a lock-in period, Smart Deposits offer the flexibility to access your funds without any restrictions or penalties.
Smart Deposits allow investors to withdraw their investments at any time. This enables them to make financial decisions according to their needs and circumstances.
No Charge Involved: Smart Deposit is a completely free product from Koshex, and there is no charge levied by Koshex for you.
Assured Returns: 100% of investors, who have invested their money through Faircent, have received their promised returns so far.
Secured Instrument: Koshex has partnered with Faircent, an RBI-registered entity. This means you can invest your money without any worries.
Taxation Of Smart Deposits
In Smart Deposit, investors essentially earn interest from the money they lend. Hence, just like interest earned from other instruments like fixed deposits, interest income from Smart Deposit is taxable.
The interest income earned from Smart Deposits is classified as ‘Income from Other Sources’. It will be added to the lender’s income and taxed as the tax bracket that the lender falls in. For example, if you are in the 20% tax bracket, you will pay 20% tax on the interest earned.
Let’s understand this with an example. If you have invested ₹2 lakhs in Smart Deposit, and the interest you earned from the principal amount is 15% or ₹30,000. If you are in the 20% slab, you will pay ₹6,000 (20% of ₹30,000) in taxes.
In a Nutshell
Finding investment options for risk-averse investors that prioritize capital preservation and provide stability is crucial. Smart Deposits offer an ideal solution for risk-averse investors seeking a low-risk investment option because they provide the perfect balance between stability and growth.
Koshex provides investors with an option to invest in six different smart deposit plans. This allows investors to invest in the schemes that best suit their investment needs. Further, parking your ideal funds is a wise choice as the returns provided are higher than the bank fixed deposits. Sign up with Koshex and explore Smart Deposits today!
FAQs
Q: Are Smart Deposits completely risk-free?
A: While Smart Deposits are generally considered low-risk investments, they are not entirely risk-free. There is always the possibility of borrowers not paying back their borrowed money on time. However, since Koshex has partnered with Faircent, 100% of investors, who have invested their money through Faircent, have received their promised returns so far. So, you can rest easy knowing that your money is in safe hands.
Q: How are Smart Deposits better than other secure investments?
A: Smart Deposits are better than secure investment avenues like savings accounts or fixed deposits as there is no lock-in period in the case of Smart Deposits. This provides an added advantage to Smart Deposits as you can withdraw the funds at any time as per your needs.
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