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Fixed deposit is a safe option, but today there are many investment instruments which can give better returns. Investors can get higher interest and diversification from options like Government Bonds, Corporate Bonds, Corporate FDs, Certificates of Deposit and Sovereign Gold Bonds.
If you still invest only in fixed deposits (FD), then it is time to think a little further. FD is definitely safe, but in today’s changing economy it is not always the most beneficial option.
Speaking to Moneycontrol, Ajinkya Kulkarni, CEO, Vint Wealth, said that FD can be a good way to start investing, but it should not be a huge part of building assets in the long run.
Know here 5 such investment options, which can give higher returns and better diversification than FD.
Government Bonds- These bonds issued by the central government are considered almost risk-free. Currently, the interest rate on RBI’s Floating Rate Savings Bonds (FRSB) is 8.05%. Investors can participate in this through RBI Retail Direct Scheme.
Corporate Bonds- These bonds issued by companies give higher interest (9–11%) than FD. However, the risk in these is slightly higher, so invest only after looking at the credit rating.
Corporate FD- These banks give higher returns than FDs (up to 8.5%), but there is no government guarantee. Investing in AAA rated NBFCs like Bajaj Finserv or Shriram Finance is considered relatively safe.
Certificates of Deposit (CDs)- This is a short term investment option issued by banks and financial institutions. For tenure of 1–3 years, they give higher returns than savings accounts.
Sovereign Gold Bonds (SGBs)- These bonds issued by the Reserve Bank of India are linked to the price of gold and also pay 2.5% annual interest. However, now the new issues are closed and can be purchased only on the exchange.
