Like most Indians, I was also aware of stocks, mutual funds, IPO, SIP but today while exploring other options to invest, I became aware of other investment options like government bonds and ETFs.
When people think of investing, their first choices are stocks, mutual funds, SIPs, and IPOs. These options are excellent for long-term wealth creation (obviously risky), but they’re not the only ways to invest. Nowadays, the financial markets offer many more options that are somewhat secure, diversified, and ideal for building a stable portfolio (but obviously risky).
What are Alternative Market Investment Options?
This Part 1 of the 2-part series explores government-backed and gold-based market investments, perfect for investors who want alternatives to traditional investment options.
1. Government Securities (G-Secs)
Government Securities or G-Secs are among the safest market investments available. Issued by the Government of India, these bonds carry sovereign backing, which makes them almost risk-free.
Why G-Secs Are Worth Considering
- Zero default risk
- Stable annual returns
- Tradeable on exchanges
- Suitable for beginners and retirees
G-Secs come in durations from 5 years to 40 years, allowing investors to pick bonds that match their goals. They can be bought easily through the RBI Retail Direct platform or stockbrokers like Zerodha and Groww.
2. Treasury Bills (T-Bills)
T-bills are short-term government-backed securities that mature in 91, 182, and 364 days.
Who should invest in T-Bills?
- Investors looking for safe short-term options
- People parking surplus funds
- Anyone wanting low-risk, liquid investments
T-bills are issued at a discount and redeemed at face value, giving assured returns backed by the government.
3. State Development Loans (SDLs)
SDLs are bonds issued by individual state governments. While they have slightly higher returns than central G-Secs, they carry minimal additional risk.
Advantages of SDLs
- Higher interest than central govt bonds
- State government backing
- Low default chances
- Tradable anytime
SDLs are great for investors looking for predictable long-term returns with slightly better yields.
4. Sovereign Gold Bonds (SGBs)
SGBs are one of the most rewarding gold-based investments in India’s financial market.
Why SGBs are popular
- 2.5% annual interest
- Zero capital gains tax at maturity
- Price appreciation of gold
- No storage or purity concerns
- Long-term (8-year maturity) wealth creator
SGBs provide a fantastic blend of fixed interest income and potential price appreciation.
5. Gold ETFs
If you want gold exposure without the long lock-in of SGBs, Gold ETFs are a great choice.
Benefits of Gold ETFs
- Traded on stock exchanges
- High liquidity
- Lower expense ratio
- No making charges
Gold ETFs track real-time gold prices, making them ideal for short-term and medium-term gold investment strategies.
6. Digital Gold
Digital gold allows you to buy gold online without worrying about storage. Platforms like Paytm, PhonePe, and brokerage apps offer secure vault-backed gold.
Why Digital Gold?
- Buy from ₹10
- Instant liquidity
- Backed by actual gold in vaults
This is one of the most accessible forms of gold investment.
Conclusion (Part 1)
This 1st part of our 2-part series focuses on safe, government-backed and gold-based market investments that help build a strong foundation in your portfolio. These options are ideal for investors who prefer low-risk, stable-return instruments within the market ecosystem.
In Part 2, we will explore market investments with higher returns, liquidity, and diversification, including corporate bonds, REITs, InvITs, commodity trading, P2P lending, and ETFs.
Continue to Part 2: Alternative Market Investments Beyond Stocks and Mutual Funds (Part 2: Bonds, ETFs, REITs)
10 Questions About Market Investments People Ask
1. Can I invest in G-Secs without a Demat account?
Yes, via RBI Retail Direct.
2. Are SDLs risk-free?
They carry very low risk but slightly higher than central G-Secs.
3. Is gold ETF better for short-term?
Yes, due to liquidity and no lock-in.
4. Can I buy digital gold on weekends?
Yes, most platforms allow 24/7 purchases.
5. Are SGBs good for 2–3 years?
Not ideal due to long maturity.
6. Are T-bills taxable?
Yes, but tax depends on the individual bracket.
7. Can I sell SGBs anytime?
Yes, on exchanges after initial lock-in.
8. Do SDLs give monthly payouts?
No, usually semi-annual.
9. Do gold ETFs track exact prices?
They track market gold prices but may slightly vary.
10. Which is safer – gold ETF or digital gold?
Gold ETFs are more regulated.
Disclaimer
This article is for informational purposes only. It should not be treated as professional advice. Please verify independently before making any decision.
