FD Rates Falling, What To Do?
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Fixed Deposit is very dear to every Indian Investor, most of the investors prefer to park their money in fixed deposits with banks.
But with the fall in interest rates regularly by banks, it’s getting hard to sustain their investments in Fixed Deposits.
An investor who invested Rs.1 crore in fixed deposit 5 years ago at 8% interest which he was getting as Rs.66,666 per month to run his household expenses, now when goes to the bank to renew his Fixed Deposit is now promised to get only Rs.45,000 @ 5.40% interest.
This is very disastrous as there was inflation in these 5 years, this man is already hit by inflation and now he has got his income decreased from the same capital, why? because FD rates are falling. A Double-Hit.
But wait, We forgot the taxes to be paid on interest on fixed deposits, A TRIPLE-HIT!
Do you know? State Bank of India revised its Interest Rates On Retail Domestic term deposits (Below Rs. 2 crores) interest rates revised w.e.f. 10.09.2020
| Tenors | Revised Rates For Public w.e.f. 10.09.2020 | Revised Rates for Senior Citizens w.e.f. 10.09.2020 |
|---|---|---|
| 7 days to 45 days | 2.90 | 3.40 |
| 46 days to 179 days | 3.90 | 4.40 |
| 180 days to 210 days | 4.40 | 4.90 |
| 211 days to less than 1 year | 4.40 | 4.90 |
| 1 year to less than 2 year | 4.90 | 5.40 |
| 2 years to less than 3 years | 5.10 | 5.60 |
| 3 years to less than 5 years | 5.30 | 5.80 |
| 5 years and up to 10 years | 5.40 | 6.20 |
Now, this you already know, let’s jump to the main conclusion – WHAT TO DO?
Well, if you are a risk-averse investor and you can’t put your single penny in assets that have volatility risk because you love the cushion of guaranteed returns, then there are FEW OPTIONS for you. (Since these are available to specific investors, you need to connect with me to discuss whether they are available for you or not).
Wait, you also have one more option. (1) if you are dynamic in nature, (2) you have a time horizon of 5 years at least, and (3) you can take a volatility risk on 15-20% of your capital to increase the overall returns and performance on your capital to cope up with the falling interest rates, then there’s an option for you.
This option is generally what we recommend to our investors who fulfill the above 3 criteria and who want to protect themselves from this falling interest rates.
Dynamically manage and allocate your 15-20% of capital in equity mutual funds, because only equity has the potential to increase the overall performance of your capital with the time horizon of 5-7 years at least.
We do this for our investors who fulfill the above 3 criteria, using our Automated Mutual Fund Conservative Portfolio which allocates equity based on the valuations in a timely and phased manner.
I have prepared a detailed presentation on this, which I can share with you on a zoom call and have a detailed discussion on the same.
You can schedule an appointment using this link – gurpreetsaluja.com/consult. Don’t worry you don’t have to pay anything for this discussion, Get the best value from me and improve your financial life.
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Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.
