The interest prices for fixed deposits are at an all-time low. If we take into consideration inflation, the returns are unfavorable. For an individual wanting to have a frequent revenue, fixed deposits are no longer the best option. India’s premier bank the State Bank of India delivers an interest price of 5.80 per cent for senior citizens for a period of 3 years. The present inflation is hovering about 5.59 per cent. If the particular person is in a greater tax slab bracket, the returns are in unfavorable territory. The rise in interest prices appears like a far-fetched dream, at least for now.
Fortunately, there are other possibilities that can offer you greater returns for these in search of frequent revenue although also making sure the security of their dollars. Here are some possibilities:
1. Senior Citizens Saving Scheme (SCSS): This scheme is best for senior citizens. Any person above 60 years can invest in this scheme. The present interest price is 7.4% payable quarterly. The maturity period is 5 years. Even advantage beneath Section 80C is readily available for this scheme. However, there is a cap of investment limit of Rs 15 lakh.
2. Pradhan Mantri Vay Vandana Yojana (PMVVY): This scheme is backed by the Government of India and delivers an interest price of 7.4%. However, this scheme has a lock-in period of 10 years. The interest is payable month-to-month. Considering the reality that it is backed by the Government of India, it tends to make an best option for added conservative investors.
3. NPS Tier II account: If the investor has an NPS Tier I account, he can voluntarily open a Tier II account. NPS Tier II account scheme G, which invests in government bonds and other connected instruments, has provided double-digit returns in the previous one year. However, the Sec 80C advantage is not readily available for private sector folks.
4. Corporate Bond Funds: Corporate Bond Funds are debt mutual fund schemes that invest in corporate bonds or non-convertible debentures. Since these funds invest at least 80% of their assets in the highest rated corporate bonds, the threat is significantly reduce. These funds have delivered returns as higher as 9%. Hence, they are best for an individual hunting for frequent revenue with low threat. Another plus is that if the investor holds these funds for 3 years, he gets indexation advantage considering that these funds are classified as debt funds although computing capital gains.
5. Short Duration Funds: These funds are regarded as an entry point for these investors who do not thoughts taking a slight threat in favour of greater returns. Since these funds earn interest revenue as effectively as capital gains, they offer you greater returns than fixed deposits. These funds are not impacted by brief term cycles of interest price fluctuations. These funds are capable to offer you steady returns and are regarded as tax-effective than bank fixed deposits. They are treated on par with debt funds, as a result supplying indexation rewards for extended-term holders. One can withdraw funds via a Systematic Withdrawal Plan (SWP) according to his desires.
A excellent investment selection needs cautious due diligence on many parameters. It is often advisable to seek the guidance of a certified economic specialist just before producing a hasty investment selection.
(By Abhinav Angirish, Founder, Investonline.in)