Fixed Deposits Alternate – where returns are decent enough ?

POSTED BY deepakjindal7 ON November 6, 2014 12:34 pm COMMENTS (8)

Can there be any other alternate to invest the money which is easily liquid when required and earns us higher interest since after deduction of TDS from Fixed deposits, the net return is very low.

8 replies on this article “Fixed Deposits Alternate – where returns are decent enough ?”

  1. rockingguy says:

    How about PPF account? You can invest 1.5 lakhs every year, returns are guaranteed and there’s no TDS

    1. Hemanth says:

      But, it has a lock-in of 15 years.

  2. Happyinvest007 says:

    Thanks Hemanth, so even long term investment (3-4 years) in liquid fund is not suggested due to recent tax changes?

    1. Hemanth says:

      3+ years is OK for liquid funds…. but there won’t be much difference b/w liquid funds and FDs.

      One thing what you can do is, invest half in liquid funds and other half in FDs…. this is advised only if you are not taking out money befor 3 years from liquid funds….

  3. Happyinvest007 says:

    how about liquid fund for which maturity is after 91 days, or short term debt fund? Please suggets.

    1. Hemanth says:

      Liquid funds are treated as debt funds. For liquid funds, units redeemed before 3 years is treated as short term capital gain, on this u have to pay tax as per your tax slab. If redeemed after 3 years, you will have indexation benefit and in such it will be very less.

      This rule came into picture after this year’s union budget, previously it used to be only ONE year (not 3 years as of now as mentioned above). So, benefit of liquid funds is no more as per new rule.

      For your time frame of 1-2 years, FDs is good to have more safe and secure. If you want to try, u can try liquid fund, but much difference will not be there b/w liquid funds and FDs.

  4. Happyinvest007 says:

    but if a person having a lumpsum amount (lets say 5-10 lacs) which he would require after 1-2 years then what would be the option.

    Usually SIP in equity suggested for long term but in above case where to invest to get more return than FD?

  5. Hemanth says:

    That is the disadvantage of FDs. You have to invest in equities – direct or mutual funds to get reasonable returns.

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