Better options than Fixed Deposits

Gaurav Seth
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isVerifiedExpertAuthor is a Zfunds Verified Expert
Gaurav Seth

Better options than Fixed Deposits

Fixed deposits are the best investment option for investors who hate risk. However, in recent years, some fixed deposit alternatives have become popular. Let's find out why—an excellent choice for conservative investors looking for a stable income from Fixed deposits. 

Convenient and hassle-free. You can get a security interest just by depositing a lump sum for a limited time. Fixed deposits are also not exposed to market fluctuations. However, as the environment related to investment changes, people are willing to take more risks to get better returns and are more tax effective. 

Also, if you are considering options other than Fixed deposits, you can choose from several funds. 

Better options than Fixed Deposits

Debt Mutual Funds 

These funds invest in relatively safe investment opportunities such as corporate bonds, government bonds, and money market products. Because they invest in high-rated bonds, they are relatively safer than other investment trusts. However, these funds may be prone to depreciation and depreciation. Still, debt funds may offer much higher returns as compared to Fixed deposits. They are a highly liquid investment option and can be an excellent alternative to Fixed deposits. 

Liquid Funds

A liquid fund is a type of debt fund that invests only in highly credit-rated money market products that mature within 91 days. The most significant advantage of liquidity funds is that they provide liquidity that is quite difficult with Fixed deposits. Therefore, liquid funds can be used not only as a substitute for deposits but also as an emergency corpus that can be relied upon in the event of a crisis. 

Liquid funds are the safest mutual funds for investing in quality products. 

Equity Funds 

These are a type of investment trust and are excellent at defeating inflation. The Fund managers need to invest investor funds to own a company, also known as a stock, such as the common stock of a listed company. As an excellent alternative to Fixed long-term deposits, they are primarily known for their higher returns than Fixed deposits. 

Equity funds reduce the risk in long-term investments. 

Corporate Fixed deposit plans

For investors who are willing to take a little more risk, you can choose from a company's fixed deposits options that are nothing more than FDs offered by the company. Interest rates on corporate FDs are much higher than bank FDs with flexible term options. 

The major disadvantage of this type of investment option is that it is not as secure as bank deposits, and thus investors should choose to invest only in established companies. 

Fixed maturity investment plans

Fixed maturity investment plans invest in debt and securities on matching terms. For example, if your life insurance term is one year, you invest in bonds, equities, and other similar options that have a term of less than one year. No advance withdrawal flexibility is given, and funds can be summoned by the due date. Therefore, your money is tied to maturity, so it is wise to be careful when deciding to invest in this option. 

The Fixed deposits Plan is an excellent alternative to Fixed deposits, but it is not very fluid. On the other hand, the risks associated with investing in these are very low and guarantee relatively high returns. 

Government Bonds 

In India, these are probably the best-known alternatives to Fixed deposits, even if the yield on government bonds is slightly higher than the yield on Fixed deposits. The lock-in time for these investment vehicles will be longer, but it will provide investors with the opportunity to diversify their portfolios.

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