4 Trends That Indicate Fixed Deposits Are the Best Investment Instruments
Pune, Maharashtra, India Every investment carries an inherent risk, involving market fluctuations, economic conditions or any other unpredictability. These risks become greater, when you invest in high-risk investment options like equities and stocks. However, fixed income instruments like fixed deposits sidestep market volatilities, and offer guaranteed yield throughout the tenor.
This is perhaps why Fixed Deposits are most trusted as investment instruments that cut across income and age, thereby finding a secure place in investment portfolios of millennials and senior citizens alike. Here are 4 economic trends that reinforce that the simplicity, security, and stability of fixed deposits is invaluable.
Trend 1: Return on investment in 2018
According to a recent report, while other instruments struggled to cope with the market and give investors desirable returns, FDs continued to make its investors smile through 2018. In fact, FDs outperformed both equities and debt funds last year. The numbers reveal that equities gave returns of around 2.7%, debt funds offered 5.5%–5.9% and FDs yielded 6.25%.
Trend 2: IL&FS default and the impact on credit-risk funds
Worrying signs appeared in 2018 when lending giant IL&FS defaulted on borrowings running to the tune of several hundred crores. Subsequently, the company’s credit ratings were downgraded by ICRA with its short-term rating slipping sharply from A1+ right down to D.
The domino effect led to liquid and ultra-short-term debt funds being affected adversely as well, ruffling many an investor’s feathers. Credit-risk funds also nosedived, offering an average return that’s lower than that of ultra-short-term funds.
Trend 3: Market is set to take shape only after the general elections
If the instability thus far has kept you on edge, consider the fact that it is likely to settle down only after the general elections. Hence, parking your savings in safe, fluctuation-free avenues may be your best bet.
Trend 4: RBI’s recent repo rate cut and its impact on FDs
Besides the uncertainty of the market, here’s another reason to invest in an FD immediately. On February 7,2019, the RBI slashed its lending rate by 25 basis points, bringing it down to 6.25% from 6.50%. With borrowing now becoming more affordable, lenders may consider lowering FD interest rates as well to maintain profits.
With a possible decline in rates on the horizon, now is the best time to invest in a Fixed Deposit. This is especially profitable when you opt for the Bajaj Finance Fixed Deposit. This is because it recently witnessed a hike in interest rates, going as high as 8.75% for regular, first-time investors and 9.10% for senior citizens at a minimum tenor of 36 months with pay-out at maturity.
In the end, investment choices boil down to your financial outlook and goals. However, having considered the turbulence in the market and the safety that fixed deposits offer you in contrast, you have every reason to give FDs your undivided attention for the foreseeable future. Invest in Fixed Deposit now, to grow your savings and reap the benefits of high interest rates easily.