RBI has made the loan given to banks expensive by 0.90 percent by increasing the repo rate twice in May-June. After this, banks have also increased the interest on FD. But this increase is very modest.
New Delhi. After the increase in the repo rate by RBI, now banks have also increased the interest rate of fixed deposits. Bank FD has always been considered a safe way of investment and now after the increase in interest, the attraction of people has increased in this direction. But is it a profitable deal to invest in bank FDs at this time?
The opinion of experts is slightly negative on this. According to an article published in Moneycontrol, investors are not going to get much benefit from investing in bank FDs right now. Investors should look for other options for better returns in a short period of time.
Very slight increase
Experts say that on the one hand, RBI has increased the repo rate twice in May-June to make the interest 90 basis points more expensive. At the same time, bank FDs have been able to go up only up to 50 basis points. Investors are also getting this interest rate only on long-term FDs. The interest on FDs of 1-3 years has only increased by 10-30 basis points. For example, SBI is currently offering 5.3 per cent interest on 1-year FDs and 5.8 per cent for senior citizens. But the inflation rate has gone up to 7.04. According to this, the return you get is going to be negative. After this, tax has to be paid on the interest earned on the FD.
Avoid investing now
These are the initial stages of increasing interest rates. Investors should not make long term investments in FDs due to the small profits visible at this time. For example, even if SBI is giving an interest rate of 5.5 per cent on a 5-year FD, it is still unable to cut the increased inflation. After this, the tax on returns is bringing your gains negative in a macro scenario. Financial planner Parul Maheshwari says that if you want to invest in FD, then you should make a mixed investment in the tenure of 1,2,3 years and then take it out on maturity and reinvest it according to the interest rates of that time.
What are the other investment options
According to Maheshwari, investors should look at fixed deposits of AAA rated non-financial institutions. He told that HDFC is giving an interest of 6.05 percent on FD of 15 months. Whereas HDFC Bank’s interest is less than 5.35 percent. Vikram Dalal of Synergy Capital Services says investors can also try government securities and tax-free bonds in the short term. Apart from this, target maturity funds or open ended short duration funds can also be good options.
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