Senior citizens and retired employees deposits their money in Fixed deposits for their survival. Now SBI has reducted the fixed deposits interest rate drastically. SBI FD gives 5.7% per annum and 10% TDS would be deducted from the earning. Take a consideration of 4% inflation rates and 10% deduction, it would be worst option to keep the money. Retired employees have doubt “where to put retirement money after retirement”, “best investment for retirement lump sum” and “where should seniors invest their money” . Mostly senior citizens keeps their money in senior citizens savings scheme which gives 8.5% returns or fixed deposits.
sbi fixed deposit interest rates 2020 for general public:
7 days to 45 days – 3.5%
46 days to 179 days – 4.5%
180 days to 210 days- 5%
211 days to less than 1 year – 5%
1 year to less than 2 year- 5.7%
2 years to less than 3 years – 5.7%
3 years to less than 5 years – 5.7%
5 years and up to 10 years – 5.7%
sbi fixed deposit interest rates 2020 for senior citizens
7 days to 45 days – 4%
46 days to 179 days – 5%
180 days to 210 days- 5.5%
211 days to less than 1 year – 5.5%
1 year to less than 2 year- 6.2%
2 years to less than 3 years – 6.2%
3 years to less than 5 years – 6.2%
5 years and up to 10 years – 6.2%
To get better returns on investment, try debt mutual funds. It would give 7% to 9% returns compare to fixed deposits. Start looking debt mutual funds as alternative to fixed deposits. Debt mutual fund is a mutual fund scheme that invests in fixed income instruments, such as bonds issued by the government and corporate, debt securities, and money market instruments.
What are the types of debt mutual funds?
Income Funds: Income funds are a type of debt mutual fund that attempts to provide a stable rate of returns in all market scenarios through active portfolio management. While it is a debt fund, income funds also run the risk of generating negative returns as many scenarios could play out – such as – interest rates may drop drastically, resulting in a drop of the underlying bond prices. It’s even possible that the active fund manager could pick lower-rated instruments that could offer potentially higher returns.
Dynamic Bond Funds: Through active and ‘dynamic’ portfolio management, dynamic bond funds seek to maximize the returns to investors by switching up the investment portfolio depending on market conditions and fluctuations.
Liquid Funds: The entire point of investing in a liquid fund is to maintain a high degree of liquidity (i.e. convertibility to cash/cash value) in the investment. Securities and instruments that are invested in by liquid fund schemes have a maximum maturity period of 91 days. Usually, only very highly-rated instruments are invested in, through liquid funds. The benefit of these funds is primarily felt by those investors who have surplus funds to park in an income generating investment. The reason these are preferred is that they give higher returns than savings accounts and attempt to provide a similar level of liquidity.
Credit Opportunities Funds: These funds are the riskier type of debt mutual funds. They undertake calculated risks like investing in lower-rated instruments to generate potentially higher returns. Anticipating a rise in ratings of papers through market analysis, credit opportunities fund managers invest in instruments rated under even “AA”, in the hope that they will rise to become higher-rated over time, and thus, increase in value.
Short-Term and Ultra Short-Term Debt Funds: These fund schemes are popular among new investors who want a short term investment with minimal risk exposure. The securities, instruments, papers, etc. that are invested in by these schemes have a maximum maturity of 3 years and usually a minimum maturity of 1 year.
Gilt Funds: These schemes invest primarily in government-issued securities which carry a very low level of risk and are generally rated quite high (as the default rate is very low and sometimes non-existent). What these schemes lack in risk-taking ability, they more than make up for, in security.
Fixed Maturity Plans: Fixed maturity plans can be closely likened to fixed deposits. These schemes have a mandatory lock-in period that varies depending on the scheme chosen. The investment must be done once, during the initial offer period, after which further investments cannot be made in this scheme. The way in which it differs from FDs is that the returns are not guaranteed, but if they do generate positive returns, they will be most likely higher than any bank FD scheme.
Compared to the traditional options like savings bank accounts or fixed deposits, debt mutual funds offer the possibility of far higher returns.
Debt mutual funds is good for
=> Investors who do not want to take risk in equities.
=> Looking for alternative to Fixed deposit.
=> Short term investors( less than 3 years).
=> unhappy with the current rate of returns provided by your savings bank account and Fixed deposit.
How to evaluate the best debt funds:
Returns from the fund: Look the past performance and see which funds have performed consistently. This will allow you to carefully analyze the mutual fund and see if it is suited to your needs.
Past performance: Track the performance history of the debt fund you are looking to invest in. It is always good to go with fund houses that are established and well-known. The investment decisions taken by the fund manager are more likely to be in consonance with your investment goals.
Expense Ratio: This can make your investment costlier as the fee is deducted from the returns. Check the expense ratio associated with your fund and try to choose a fund with a lower expense ratio. This would mean that the return would be greater.
Top Debt mutual funds in India:
- IDFC Government Securities Constant Maturity Growth Direct Plan (1 year return 16%, expense ratio 0.4%)
- SBI Magnum Constant Maturity Growth Direct Plan(14.7%, 0.33%)
- Nippon India Gilt Securities Growth Direct Plan(15%,0.6%)
- ICICI Prudential Long Term Bond Growth Direct Plan(14%, 1.19%)
- DSP Government Securities Growth Direct Plan*15.9%, 0.54%)
- Edelweiss Government Securities Growth Direct Plan(13.8%, 1.22%)
- Kotak Dynamic Bond Growth Direct Plan (11.5%, 0.43%)
- SBI Dynamic Bond Growth Direct Plan (14.8%, 1.07%)
Debt MF is better than FD if your monthly salary is less than 50 thousands
Do you know Fixed Deposit is not only option, Try Debt Mutual funds