What Is Better Than Fixed Deposit?

What is the best alternative to fixed deposits?

Ans.

A fixed deposit is a low-risk, low-return investment option ideal for highly conservative and risk-averse investors.

If you are willing to take some degree of risk there are several better alternatives such as Liquid Mutual Funds, Debt Mutual Funds etc..

Is Fixed Deposit better than savings account?

Fixed Deposits have a fixed lock-in period, which limits the unnecessary withdrawal of your money until maturity. A savings account, on the other hand, enables you to withdraw any amount at any time, which proves detrimental to your goal of wealth appreciation.

Which bank gives highest interest rate on FD?

Currently, banks offered a rate of interest ranging from 3.50% – 9.75% on senior citizens FDs depending on the deposit amount and the deposit tenure….Fixed Deposit Interest Rates 2020.BanksFD Interest RatesTenureSBI3.30% – 6.50%7 days to 10 yearsCanara Bank4.00% – 6.25%7 days to 10 yearsHDFC3.00% – 6.25%7 days to 10 years4 more rows

Can you lose money in fixed deposit?

Interest rate risk When you put money in an FD, the rate of interest is guaranteed. However, there is no guarantee that the rate of interest will be the same the next time you want to put money in FD. … You effectively end up losing money in your old FD because you lost that higher-returning opportunity.

How can I double my money in 5 years?

How the Rule Works. To use the Rule of 72, divide the number 72 by an investment’s expected annual return. The result is the number of years it will take, roughly, to double your money.

Do debt funds have lock in period?

Except for fixed maturity plans (FMPs), debt mutual funds normally do not have any lock-in period. However, early exits could result in a higher tax out go. … Short-term capital gains on debt mutual funds are added to the income of the investor and taxed as per the applicable income tax slab.

Which is better FD or liquid fund?

Liquid fund investors are considered to be in a better position than fixed deposit holders in case of taxation on their respective investments. When it comes to tax on liquid funds, the investors are entitled to avail tax indexation, which directly helps them to lower their burden of tax-related expenses.

What are the disadvantages of fixed deposit?

Below are three disadvantages of investing in fixed deposits:No flexibility to access your funds. Because your money is locked away with the bank, often for months (sometimes years), you lose the flexibility of a regular, day-to-day savings account. … Relatively low investment returns. … It is not sexy.

Is there any risk in debt funds?

Investing in debt funds carries various types of risk. These risks include Credit risk, Interest rate risk, Inflation risk, reinvestment risk etc. But the key risks which needs be considered before investing in Debt funds are Credit Risk and Interest Rate Risk; Credit Risk (Default Risk):

When should I invest in debt fund?

Debt Funds are ideal investment options for those who looking for steady income as these funds deliver steady but low-income returns when compared with equity funds. Debt funds are low-risk investment options and the interest the investor is likely to yield upon maturity; they are more stable and less volatile.

Is FD a good investment?

Fixed Deposits As one of the most traditional and safest means to invest, many prefer it for wealth creation and saving taxes. Yes, it is eligible for tax deduction under 80C. They also offer high-interest rates as compared to savings accounts. You can open an FD account with almost all the banks in India.

Which liquid fund is best to invest?

Top 10 Liquid Mutual FundsFund NameCategoryFund Size(in Cr)Quant Liquid FundDebt₹166PGIM India Insta Cash FundDebt₹815ICICI Prudential Liquid FundDebt₹54,052LIC MF Liquid FundDebt₹10,14012 more rows

Which debt fund is best?

Top 10 Debt Mutual FundsFund NameCategory1Y ReturnsLIC MF Banking & PSU Debt FundDebt8.9%Aditya Birla Sun Life Low DurationDebt8.8%Axis Short Term FundDebt10.7%PGIM India Ultra Short Term FundDebt7.5%12 more rows

Is SIP better than FD?

Fixed deposit is the best investment option for conservative investors only. … On the other hand, returns cannot be guaranteed in a systematic investment plan or an SIP. There is no doubt in the fact that an SIP provides higher returns in comparison to fixed deposits but there is no guarantee of returns in an SIP.

How do debt funds make money?

Debt funds are a type of mutual fund that generate returns from their investors’ money by investing in bonds or deposits of various kinds. These terms basically mean that they lend money and earn interest on the money they have lent. … It is in fact, by far the largest borrower (and thus bond-issuer) in the country.