Keeping money lying idle is not the best thing to do. If you are a risk-averse investor, fixed deposits and liquid MFs are the best options. Here are some tips that can help you decide your investment plans.
Fixed Deposits: 1) The bank will inform you the rate of interest you will earn on the FD.
2) You need to select the duration of the FD before you start. Most banks offer duration of as little as 7 days and up to 5 years. There may be penalties if you break your FD before the deposit tenure opted for. (Reuters)
3) TDS will be applicable if interest income exceeds Rs 10000 in a particular financial year.
4) Your bank may deduct TDS before paying out any interest due to you on the FD. However, if the TDS rate is lower than your personal tax rate, you are liable to pay interest on the FD when you file your tax returns.
5) Currently, the best FDs are providing returns between 7 to 9 per cent.
Liquid Funds: 1) The money is invested in money market instruments like a certificate of deposits, treasury bills, commercial papers and term deposits. (Reuters)
2) The underlying assets have low maturity period and provide you low-interest rates. (Reuters)
3) You can enter and exit from the scheme anytime. Moreover, funds have no entry load and exit loads. (Reuters)
4) Returns are higher than bank savings account, though are not guaranteed. (Reuters)
5) Currently, best liquid funds are providing returns between 8 to 10 per cent.