Here are some of the best 5-year investment plans in India that offer risk-free or low-risk growth:
1. Post Office Time Deposit (5-Year TD)
Interest Rate: ~7.5% per annum (as of 2025)
Risk Level: Very Low
Tax Benefit: Eligible for deduction under Section 80C
This government-backed savings scheme is a popular choice among conservative investors. The 5-year Post Office Time Deposit offers fixed returns and comes with tax-saving benefits, making it a safe and rewarding option for risk-averse individuals.
2. Public Provident Fund (PPF)
Interest Rate: ~7.1% per annum (compounded annually)
Risk Level: Zero risk
Lock-in Period: 15 years (with partial withdrawals after 5 years)
Tax Benefit: EEE status – exempt at investment, interest, and maturity under Section 80C
Though it has a 15-year lock-in, PPF allows partial withdrawals after 5 years, making it a suitable low-risk option for those looking for flexible yet long-term wealth accumulation.
3. National Savings Certificate (NSC)
Interest Rate: ~7.7% per annum (fixed)
Risk Level: Very Low
Lock-in Period: 5 years
Tax Benefit: Eligible under Section 80C
NSC is a fixed-income investment backed by the Government of India. It is ideal for small and medium investors who seek guaranteed returns after five years. The interest is reinvested every year and paid out with the maturity amount.
4. Bank Fixed Deposits (FDs) – 5-Year Tax Saver FD
Interest Rate: Varies (around 6.5% – 7.25% p.a.)
Risk Level: Low
Lock-in Period: 5 years
Tax Benefit: Up to ₹1.5 lakh under Section 80C
Bank FDs are among the oldest and most trusted investment options. A 5-year tax saver FD helps you earn safe returns while reducing your taxable income. The interest, however, is taxable.
5. Recurring Deposits (RDs)
Interest Rate: 6% – 7% p.a. (depends on the bank)
Risk Level: Low
Lock-in Period: Typically 5 years
Tax Benefit: Not eligible under Section 80C
Recurring deposits are suitable for those who want to save a fixed amount every month. It encourages a disciplined saving habit and provides guaranteed returns upon maturity. While RDs don't offer tax benefits, they remain a low-risk option with assured returns.
Bonus Option: Sovereign Gold Bonds (SGBs)
Interest Rate: 2.5% p.a. (on face value) + price appreciation
Risk Level: Moderate (linked to gold price)
Lock-in Period: 8 years (but tradable after 5 years)
Though not entirely risk-free due to gold price fluctuations, SGBs are backed by the government and offer a fixed interest component, making them an attractive semi-risk option for long-term investors.
Final Thoughts
When investing for 5 years with a low-risk appetite, it’s important to strike the right balance between security, returns, and liquidity. Government-backed schemes like NSC, PPF, and Post Office TD offer peace of mind with fixed returns. Bank FDs and RDs remain reliable for predictable income, while a small allocation to SGBs can offer a growth kicker.
Always evaluate your financial goals, tax planning needs, and liquidity preferences before choosing the right plan. For truly risk-free growth, sticking to government-secured and bank-backed options is the smartest move.