Invest in multiple banks
The Monetary Policy Committee of the Reserve Bank of India (RBI) on Friday did not change the policy rates and reduced the inflation rate for the financial year 2021-22. Fixed deposit (FD) investors will have to wait for the interest rates to rise with the RBI maintaining status quo on key rates. FD interest rates have been at several-year lows for some time now as banks and NBFCs have been reducing rates in the last two years.
Due to the fall in fixed deposit FD rates, investors are getting less return on their investments. To get more profit, investors can consider other investment options. Let us know what investors can do to increase the return on their deposits.
floating rate FD
Nowadays many banks are offering floating rate FD. Floating rate FDs or bonds are a good option if you are not sure about interest rate fluctuations in the near future and do not want to invest your savings at lower rates.
In floating rate FDs, the interest rate is linked to a benchmark like repo or 10-year government bond yield. So if RBI increases the repo rate in futures, then the interest rate in your FD will also go up.
rbi floating rate bond
Investors can also consider putting their money in RBI floating rate bonds. It has a tenure of 7 years and is currently giving a return of 7.15 per cent, which is much higher than the rates offered by banks on FDs.
The interest rate in this bond is paid half yearly. Therefore it can be a good option for those senior citizens who have exhausted their options like Senior Citizens Savings Scheme and PMVVY.
Invest in multiple banks
The ideal strategy for FD investment is to keep deposits in multiple banks to strike the right balance between risk and returns. The returns on FDs of public and private banks range between 3-7 per cent while many cooperative and small banks offer 1-2 per cent higher interest rates.
If your investment is large and your risk appetite is high, then after assessing your risks, you can switch your FD in deposit schemes with low and high returns. If you want higher returns, you can opt for small banks.
However, be aware of the stability of the bank and minimize your risks so that you do not face any trouble in case the bank faces a crisis.
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Shehnaz is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing about Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.