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  • Category: Investments

    Which type of Investment is better in this time FD,RD, PPF,Post Banking Schemes or any else?

    Interested in investing/ saving your money? Looking out for the best investment option? Here, you can choose among the investment options based on the advice given by experts.

    As you all know saving and investment both are necessary. Which type of investment is Better in this time: Fixed Deposits, Recurring Deposits, Public Provident Fund (PPF) , Post Banking Saving Schemes, National Savings Certificates(NSC), Kisan Vikas Patras, Mutual Funds or any else?
  • Answers

    8 Answers found.
  • This thread is being shifted to the Ask Expert section.

    'Any fool can know. The point is to understand."- Albert Einstein

  • Presently bank FD interest rates are sliding down day by day and it is expected that they may touch a low of 5/5.5 % in near future.
    Now PPF at 7.8% interest is still a good choice and maximum amount upto 1.5 lac can be invested there. Further the interest earned in PPF is tax free.
    Seeing the market trend MF schemes look prospective. One can invest some amount in equity MFs and some in debt funds. This will make the average investment less risky as investment in equity is riskier than debt.
    One can also invest in high yield bonds which can fetch interest at 7-8 % and some gain at the time of maturity.

    Thoughts exchanged is knowledge gained.

  • Due to growth in economy and other favourable things Govt is reducing the loan interest and in turn the bank FD rates are decreasing.

    Now there are few areas where still rates are more than bank FDs and time being one can choose them for investment.
    1. Post office kisan vikas patra - 7.5%
    2. PPF account - 7.8%
    3. Equity MFs - 12-13% (based on past performance)
    4. Debt MFs - 7-8% (based on past performance)
    5. Govt/PSU bonds - 8-9% (based on market value)
    6. Pradhan Mantri scheme - 8.3% (only for senior citizens)
    The return on investment is dynamic in nature and go on changing with changed economic conditions. So churning and swapping of portfolio is also done time to time.

    Knowledge is power.

  • Diversification. No single source of investment is good enough. Be it mutual fund, share market, all have their own set of issues. And for this reason investing into one type is not good. FD, PPF, RD are debt instrument you should have 50% of money into this. 20% towards retirement funds from either debt or the equity. And remaining 30% you should go for med equity or pure equity. Depending on your risk factor. You can understand when to and not to invest into that. Just make sure that what you choose there is some sort of diversification. That's how you are going to be investing into the bank. I have found that many who are pushing on equity alone are basing on the risk. But that is not worth that in many ways. So properly diversify and you can then be safe about your investment as they reflect the change in economy.

  • As on date if you see the market conditions, FDs ot RDs or POBSs are not giving good rates of interest. So the value of your money will come down. PPF is a good option but you can keep upto 1.5 Lacs per annum in that account. If you want to save more than that it is better to go for mutual finds. They are reasonably good. If you want quick returns you can invest in Shares but heavy risk will be there, You should be able to liquidate them by carefully observing the market trend. For this it is always better to go by an expert in the line for investing in Mutual funds or shares. If you are happy with moderates returns go for MF with a good adviser's suggestion.

    always confident

  • For a beginner it is convenient to start with bank Recurring deposit.
    Once the RD matures the amount can be kept in Bank Fixed deposits and new RD may be started.
    Public Provident Fund account can be started if you have to avail the permitted exemption in income tax . But you have a commitment to continue the account for long terms-15 years.
    After the initial necessary savings in bank accounts and PPF you may invest in mutual funds. Here also you may choose the Tax Saver type as it will help in tax savings and probably higher return than bank deposits.
    In relation to the Tax Saver Deposits of banks, Equity linked tax saving schemes of Mutual Funds are better because period is less and returns can be better. But there is also a risk of capital erosion too.
    If one has the capacity to take risk then equity investment may be okay as there are chances of much higher returns than in any of the earlier mentioned avenues.

    But a prudent person may start and follow the sequence as mentioned above.

    However if you are experienced and have already a sufficient corpus of essential low risk saving, then you can go for equity linked investments. As of now they bring much higher returns than bank or post of ice savings products.of course the rider is probable risk. So you should know your risk level and do the investment.

  • The answer to this question basically depends on three aspects
    1)Purpose of saving money/Tenure after which needed
    2)Money to be saved lump sum or per month
    3)Are you a tax payer and want to save tax

    If you have lump sum money and want to save tax go for 5 year tax saving FD,NSC , Kisan Vikas Patras and ELSS mutual funds .All these instruments have one thing in common that they have a lock in period.

    If you want to save money periodically then go for RD.
    My suggestion is that these days we can see that the rate of interest is very low in banks so it is better to invest in mutual funds. Mutual funds are subject to market risks.

  • The author has asked such a question which can't be answered in a limited space. Even then I am giving it a try. The investment experts always advise us not to keep all eggs in one basket. We must sub-divide our investment based upon our circumstances. Our investment must also be goal-based. For protection of our capital, getting reasonably better rate of interest and for tax benefits, we must invest an amount in Provident fund. For emergency cash, we must save an amount in Saving Account of the bank or in Liquid Mutual Fund. For a marginally higher return on a lumpsum amount, we must keep the amount in Bank FDs. For investment of a fixed amount at reguar interval (say every month), we must open a Recurring Deposit or invest in a Equity Mutual Fund (for the beginners, I would prefer large -cap fund). Equity mutual funds give better returnswith tax benefits than other investment instruments for a time-horizon of five years or more.

    National Savings Certificate is almost like Bank FDs with marginally better rate of interest with partial tax benefits.

    However, it must be stated that in the present regime of interest rate reduction, perking money in mutual funds through SIP is more beneficial if the investment goal is more than 5 years away.

    Beware! I question everything and everybody.

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