Fixed deposit rates are perhaps the lowest since two years now. The savings they provide are not helpful if we look at it carefully. You can try out some great Investment Ideas that will give you far more returns than what an FD can provide you in years. For protecting your profits, you can do any one or more of the following very quickly:
- Start small saving schemes like NSC or PPF: For risk-averse people, these small investment options are an excellent choice. The only thing is you have to lock in your fund for some period to get good returns on your money. Interest rates for these small investment options are setup quarterly. They vary depending on the market condition.
- Liquid funds management: Investing in short-term instruments is known as liquid funds. This mode of investment might vary anywhere less than 90 days lock-in period. There is no intermediary like a bank involved in the middle. It can be a great option if you are unsure of locking in money for several years. You get wholesome of 7 to 8 % interest rate on liquid funds.
- Arbitrage fund: This is another type of fund that helps you manage your investment options. These are more like mutual funds that give you money on future contracts. They are extremely liquid and a safe choice. The arbitrage fund is then invested in equity instruments.
- Debentures and FD: Debentures are nothing but long-term business loans. When you save money in FD, it is like you are giving money to the banking return of which they pay you a specified interest rate. Companies are considered to be riskier than banks hence people put in money in FDs that in the stock market. People save money in an FD for as long as ten to 15 years or even more.
- Government bonds that are tax-free: many governments backed entities issues such bonds for the public. The interest on this kind of bonds is tax-exempt. For people who fall into the 30% tax bracket will get interested rates still higher than FD. Tax-free return interests have also come down a little due to the overall interest rate in the market coming down, but it remain the highest of all. Hence one can plan to invest in tax-free government bonds without worrying about anything.
- Debt funds: If you are a small scale investor merely put money on long-dated government debt or corporate debt. Debt mutual funds are a great way of investment not many people use.
- Equity mutual funds are top-rated today for small-scale investors. There is a slightly increased risk, but it is great to invest in equity mutual funds. For retail investors, it is a beautiful option that will help them grow at a good pace. It is all about spending smartly like this in order to get some extra money from the bank or from the market.