Invest in FD’s or any other better option ?

POSTED BY Ramchandra Nathgosavi ON February 27, 2014 2:14 pm COMMENTS (9)

Hi,

I have a annual package of 3.84 Lac per year.  I have some FD\’s in banks where I got more than 10,000 Rs interest which is taxable. Now I want to invest additional around 3 lac in FD\’s but that will increase in interest on FD\’s.  I don’t want to keep that big amount in saving account which is giving me only 4% return. As per my understanding, better to invest in FD\’s  which will give me around 9% return & at tha same time I will get this money easily, if required. is there any disdvantage to keep such big amount in FD\’s considering tax on interest or there is any other way to invest in. (I don’t want to lock this amount for many years). Please advise.

Regards,

Ram

9 replies on this article “Invest in FD’s or any other better option ?”

  1. ashalanshu says:

    Dear Ram, what benefit ‘ll you get from saving TDS? If the idea is to evade Tax, do it at your own risk. Personally I w’d prefer multiple FDs in a single branch. Not to avoid TDS but to have liquidity open, in case I need to liquidate few FDs against a large FD.

    Thanks

    Ashal

    1. Ramchandra Nathgosavi says:

      Thanks Ashal!! Your answers are really helpful.

      Regards,
      Ram

      1. ashalanshu says:

        Dear Ram, it’s my pleasure.

        Thanks

        Ashal

  2. Ramchandra Nathgosavi says:

    Thanks ashal,

    My next question was single FD (of large amount) or number of FDs in different banks/branch (to save TDS).

    Regards,
    Ram

  3. Ramchandra Nathgosavi says:

    Hi,

    This money I will use to buy flat for which search is going on. So I required this money at that moment. I have some other investments also which will give me additional amount. These 3 lac I kept in saving account for easy access but now I feel that better to invest for short term with higher returns than saving account.

    I have not targeted any amount to get after investment but I just don’t want to keep it in saving account with less returns However, my main question is, is it better to invest in FD considering 9% return, & after deducting TDS I will get 8.1% returns? (Thanks sumit). Or is there any other instruments where I will get higher returns with less risk for short time period. (6 months). One of my friend suggested me that invest in FD of various banks/branch so that TDS will not get deducted but it seems very long & tedious process to me.

    Regards,
    Ram

    1. ashalanshu says:

      Dear Ram, please invest in FDs for simplicity of taxation as well as redemption.

      Thanks

      Ashal

  4. ashalanshu says:

    Dear Ram, what do youwant to do with your amount at the end?

    Thanks

    Ashal

  5. Sumit says:

    Hi Ram,

    The interest earned from FD is fully taxable, whether bank deducts the TDS or not.
    So, the 9% return becomes 8.1% considering you are in 10% bracket.
    There are several products available which helps to create wealth and meet financial goals. Hope you have set your goal amounts and time to achieve those, and investing properly to meet them.

    Thanks
    Sumit

  6. Hemanth Chandra says:

    You can check ‘Liquid Funds’ which give returns almost as an FD and liquidity is very high.

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