LIC Mutual Fund: Higher returns than FDs and the trust of LIC! 4 excellent schemes to grow your money without significant risk..

LIC Mutual Fund Low-Risk Schemes: For Indian investors, 'security' and 'LIC' are almost synonymous. When it comes to investing hard-earned money, most people opt for the risk-free route of Fixed Deposits (FDs). However, in times of rising inflation, relying solely on FDs can erode the real value of your savings.

If you want your money to remain safe while earning returns that are 1.5% to 3% higher than FDs, LIC Mutual Fund's low-risk schemes could be an excellent choice for you.

Shielded from the volatility of the stock market, these four specific LIC Mutual Fund schemes are designed for investors who wish to grow their wealth steadily with minimal risk. Let us explore these four schemes in detail:

1. LIC MF Banking & PSU Debt Fund: A Guarantee of Safety

If you want to avoid taking any risk with your money, this fund is for you. As the name suggests, this fund primarily invests in secure bonds issued by Public Sector Undertakings (PSUs), the country's strongest banks, and the Reserve Bank of India (RBI).

Its objective is to provide stable returns alongside capital preservation. It has no exposure to the stock market. This is an excellent scheme for investors looking to park their money for 1 to 3 years and seeking a safer, superior alternative to bank FDs.

2. LIC MF Savings Fund: A Better Alternative to Bank Accounts for the Short Term

We often keep significant amounts of money in our bank savings accounts, earning a meager 3-4% interest. The LIC MF Savings Fund is a low-duration debt fund that invests in short-term, secure corporate bonds and money market instruments.

This fund strikes an excellent balance between liquidity—the freedom to withdraw funds—and superior yields. If you wish to park your money for a period ranging from six months to two years, this option can prove far more beneficial than a savings account or a short-term Fixed Deposit (FD).

3. LIC MF Arbitrage Fund: Risk-free stock market exposure and tax advantages

This fund operates on a highly sophisticated strategy. Instead of investing directly in the stock market, it generates profits by capitalizing on the 'price difference' between the cash market and the futures market.

Regardless of whether the market rises or falls, the risk of loss in this fund is virtually zero. Its standout feature is the 'tax benefit.' Despite being as safe as a debt fund, it is classified as an 'equity fund' under income tax regulations; this results in lower taxation, thereby boosting your net return beyond that of an FD. This scheme is an excellent choice for individuals looking to invest for 3 months to a year who fall into the high tax bracket (30% slab).

4. LIC MF Conservative Hybrid Fund: For the long haul

If you seek returns that beat inflation, adding a dash of equity to your portfolio is essential. This fund allocates 75–80% of your total investment into highly secure bonds to ensure capital protection, while the remaining 20–25% is invested in blue-chip stocks—the giants of the stock market.

This blend of debt and equity works wonders over the long term. While the equity component may introduce some volatility, the fund easily outperforms FDs in the long run. If you can commit to an investment horizon of 3 to 5 years (or longer), this fund can become the strongest pillar of your portfolio.

What should you keep in mind?

Experts believe that if you wish to start investing in these funds, opting for a Systematic Investment Plan (SIP) is preferable to investing a lump sum amount. While money gets locked in bank FDs—incurring a penalty for premature withdrawal—in these mutual funds, your money not only remains safe, but you can also easily withdraw it whenever the need arises.

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