Investors having money in fixed deposits with different financial institutions should definitely worry as they are not getting the returns that they actually should get. The returns in FDs today are also the same but inflation is reducing the value of their invested money. The need is to balance the investments. The rising inflation is a big concern but instead of worrying about it, the better option is to look for a better investment option than a fixed deposit in India before it is too late.
The world has witnessed the unexpected growth in the inflation rate affecting the global economy. In India, the Reserve Bank of India is forced to increase the repo rate repeatedly at a short gap to bring down the inflation rate. The increasing inflation rate has become one of the major reasons that has given rise to the need to find the Best Alternatives of Fixed Deposits Amid High Inflation Rates in the country.
Below are the Best Alternatives of Fixed Deposits Amid High Inflation Rates
1. Fixed Maturity Plans
2. Government bonds
3. Corporate FD
5. Sovereign Gold Bond (SGB)
6. Ultra-short-term funds
7. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Why to find alternatives to fixed deposits in 2022
Fixed deposits in India have been one of the most preferred choices for safe investment. People do not think beyond FDs because of many reasons. But with the many initiatives on investors education, the awareness has increased across the country. Today, retail investors are taking interest in other fixed income securities and thinking beyond FDs.
The rate of interest in FDs is generally low. FDs are taxable, which further reduces the earnings you earn as a net amount. If the most common question – Why to find alternative of fixed deposits in 2022 troubling you, read the content carefully. It will help you find answers to many of your questions.
The continued growing inflation rate has forced investors to find alternative of fixed deposits in 2022. There has been record growth in the inflation rate worldwide in 2022. It has resulted in many problems. The inflation-adjusted real returns with rising inflation fall further. It has also been observed that the debts fund has suffered during inflation. It is essential to maintain a balanced portfolio to make the most of your valuable investments specifically during rising inflation.
What are short-term investment options better than FD?
Short-term investment is a type of investment used by investors to temporarily park their fund that can be easily converted into cash generally within a period of five years. Every individual has both short-term and long-term goals in life. You can make your investment decision based on your financial objectives in life including short-term goals.
Quick 7 Facts of Short-term investment
1. Short-term investments are also known as temporary investments or marketable securities.
2. The term typically is within five years.
3. It can be converted in cash without much effort.
4. Short-term investments offer relatively low income.
5. They have high liquidity.
6. Some examples of short-term investment are saving accounts, recurring deposits, fixed deposits, national saving certificates, liquid funds, etc.
7. A company’s holding intended for sale within a year is also referred to as a part of Short-term investment.
The below popular short-term investment options can be a better option than FD
• Certificate of Deposits (CDs)
• Money market accounts
• Treasury bills
What Things to Consider prior to Investing in a Short-Term Investment option?
If you wish to go for a safe investment option, consider the essential factors that can help you avoid disappointment. It can also accomplish your varied objectives in life.
Consider the below Things prior to Investing in a Short-Term Investment plan
• Capital protection
• Tax liability
List of popular Short-Term Investment plans for the retail investors
• Recurring Deposits
• Liquid Mutual Funds
• Savings Account
• National Savings Certificate
•Debt Mutual Funds
9 Top Short-Term Investment Choices in India
|Investment||Holding Period||Return Rate|
|Corporate Deposits (CD)||1 to 3 years||6% – 12% per annum|
|Equity Mutual Funds||12 months to no limit||7% – 15% per annum|
|Recurring Deposits||6 months to 10 years||4% to 8% per annum|
|National Savings Certificate (NSC)||5 years||6.8% per annum|
|Treasury Securities||91 days to 364 days||7.5% per annum|
|Savings Account||Nil||2% to 7% per annum|
|Debt Mutual Funds||36 months to no limit||6% – 9% per annum|
|Stocks, Commodities & Derivatives Market||Less than a day to no time limit||Variable|
|Liquid Mutual Funds||1 day to no limit||2% to 6% per annum|
Note: The information shared above in the table is taken from various sources. The rate of interest and the tenure is subject to change. Check the latest information about the respective Short-Term Investment options before making investments.
9 Top Short Term investment choices in India
Better Investment Option than Fixed Deposit in India
Finding a better investment option than fixed deposit in India can help millions of retail investors who are unable to think beyond fixed deposits. The retail investors in India choose to invest in FDs with different maturity periods. The interest rate and tenure vary. The return on FDs also depends on the tenure you choose.
The better investment option than fixed deposit in India as discussed above include Certificate of Deposits (CDs), Money market accounts, High-yield savings accounts, Government bonds, Treasury bills, and other types of bonds.
Bonds – a better investment option than fixed deposit
Bonds are debt security issued by an entity looking to raise money from investors to fulfil their various business objectives including operational expenses, projects, business expansion, and more. A bond issuer is liable to pay a fixed coupon rate as interest and the principal, also known as face value, back at the end date of maturity.
Bonds feature coupon payment, predictable income, fixed income, liquidity, capital protection and comparatively higher returns on investment. It is known to provide investors with a fixed interest for the tenure opted for maturity. There are various classifications of bonds based on their features. You can choose the bond you prefer to invest considering your long and short-term financial goals. You can invest in corporate bonds with long-term maturity if you are looking for higher returns.
1. Investment in bonds is relatively safe.
2. You get interest paid at a predetermined interval
3. Guarantee of capital protection and much more
During rising inflation, which debt fund category is recommended?
No matter whether it is a normal period or the period of rising inflation, taking wise investment decisions is always necessary. At times when you find it difficult to make right decision prefer to seek investment expert advice. It is better to seek expert advice over experiencing monetary loss. If beating the risk of interest rate is in your mind, it is better to go for medium-term and short-term debt funds in comparison to long-term debt funds because it has the associated risk of higher interest rate with them.
Why go for Portfolio Diversification during rising inflation?
Portfolio diversification is the best all-time solution. It can help maximize the returns and minimize risks involved with different assets. Investing in equities can be a promising idea during inflation period as it is known to perform well in the financial market. Also, the return in equities is high in comparison to other investment instruments. Experts recommend portfolio diversification and to follow a balanced approach if required under the guidance of investment experts. During rising inflation, it will help you maintain the purchasing power of your money.
Why Choose BondsIndia to buy bonds online
1. BondsIndia is a secure and technology-enabled online platform for trade in bonds and other fixed income securities.
2. BondsIndia is also India’s only 100% digital trading platform for all types of bonds.
3. India’s biggest library of listed bonds.
4. Paperless KYC completely online.
5. Complete price transparency.
6. Digital reporting along with digital payment.
7. Hassle-free Portfolio tracking.
8. Realtime Online Settlement with ICCL.
9. Investor education resources.
How to Invest in Bonds at BondsIndia?
Investing in bonds at BondsIndia is easy and hassle-free.
• Visit BondsIndia.com.
• Create your account.
• Complete your KYC online.
• Browse through the distinct categories and choose the bonds you wish to buy.
• Select the mode of payment.
• Initiate the transaction.