Fixed Deposits or Liquid Funds, Where to Invest to Get Steady Returns?

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With the passage of the 17th year of the millennium, there comes a progressive transition of from traditional to ‘modern society’ in which old values and liberals are being replaced by new ones. In this modern era, the ways of investing money also undergo a change. One needs to become wiser than few years back while investing his/her surplus money to get steady and sure returns. Perhaps, it would not be a good idea to keep your extra money idle at home or in Saving Account with low rate of interest. Hence one should invest his money so that it may grow more than the Consumer Price Index. Now the first question which comes in mind is where to put your money to get good returns. Which anyone may utilize at the time of emergency like loss of job, illness and to cover loss in business and many more.

One can store his/her surplus money either by investing in Bank’s fixed Deposit or in liquid Mutual Funds. Before choosing or investing in either of the two, one must keep in mind his financial requirements, return, and more importantly the risk factor.

Investment in Fixed Deposits

A Fixed Deposit is a financial instrument offered by Banks which provide investor a higher rate of interest as compared to Saving Account for a fixed duration. The rate of interest on FDs vary from time to time hence one before investing in FDs should approach to Bank and the Bank will prepare FDs with the present rate of interest. This Money is generally invested for fixed duration and one can get his/her money on maturity of the instrument. One should be cautious while choosing duration of FDs as if one needs fund within a short span of time then may choose FDs for shorter term. Most Banks offer FDs from 7 days to 5 years durations. The Bank may impose penalty or one has to face loss of interest if one breaks his/her FDs before maturity date. TDS will also be applicable if the interest goes up to Rs. 10,000 on all the FDs within a financial year, subject to change from the next financial year. Moreover, one can get tax benefit if FDs under the Tax Saving Schemes are kept for 5 years or more. The different Banks offers different rate of interest on FDs and rate of interest are higher for Senior Citizens. Hence one should clarify all these things, before putting his/her money in FDs.

But the old idea of investing your surplus money in a fixed deposit account has passed, as the people are more interested in ‘liquid money’ now a days.

Investment in Liquid Funds & Liquid Mutual Funds

If one wants to keep money for financial security in case of emergency then it is good idea to keep money in Saving Banks or in liquid funds as emergency funds. If one wants to park money for the short duration, then one may opt for liquid mutual funds. Liquid funds are ideal alternative to fixed deposits because they are invested in low-risk debt and money market securities. There are many options of investing in liquid mutual funds and may be adopted after proper observation and advice.

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