Should I renew the FD on maturity or reinvest in Debt Funds ?

POSTED BY Jai ON January 28, 2014 4:37 pm COMMENTS (3)

One of the bank FD on my wife’ name (~Rs 40000) is maturing in coming month. She is a homemaker now and no direct source of her income currently. She doesn’t want to invest in equity MF due to fear of loosing money. The money is not really needed immediately. Would you suggest if FD should be renewed at bank (~9%) or put in some debt funds? thx

3 replies on this article “Should I renew the FD on maturity or reinvest in Debt Funds ?”

  1. Ashish Garg says:

    Dear Tonsi30,

    Corporate FDs are not 100% safe, there are some instances where companies failed to pay interest or even the principal. If you wish to choose a corporate FD instead of Bank FD, please look at the CRISIL Rating, higher rating means more stable a company is.

    Ashish Garg

  2. tonsi30 says:

    Thx Akgc2. Corporate FD is something which I have not done so far. When googled, it gave a long list of companies offering 9-12% for 1-2 years. I am not sure how to decide which is safer one? Can you help.

  3. akgc2 says:

    If the 9% are completely tax free ( i.e. no TDS on interest) you can continue with the FD.

    Since her income is zero she does not come under any tax brackets and hence you can think of Corporate FDs which offer interest rates between 12-14% for a period ranging from 1-5 years or sometimes more.

    Just google for “Indian Corporate FDs”

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