Alternatives to Fixed Deposits (FD) in India

So, What are The Options Which are Safe like Bank FDs?

We take a look that some other options that are available to investors which can be considered. Some of them which can be given a try by potential investors are Debt MFs, Corporate deposits, small savings schemes, Government bonds etc.

All of these, offer good returns on the investments that the individual makes. Here, we take a closer look at the above mentioned financial products to see whether they are really viable to the potential investor.

1. Debt Mutual Funds - These are mutual funds which assure the investor of fixed returns by investing in corporate bonds, government securities etc. Though they are low risk compared to other mutual funds, it is not entirely risk free.
2. The fact that works in favour of debt mutual funds is that even though the investors money is put to use in the markets, the returns to the individual who invests in them are equal or higher than the investments made.
3. Investors who are willing to take on some risks can try debt mutual funds as the average returns available to the investors in the one year and three year period are 6.1 and 7.1 percent respectively.

1. Corporate deposits - Though the interest rates of corporate deposits have also come down, it is an alternative to FDs as the interest rates offered by slightly higher than those offered in FDs.
2. It is the same as fixed deposits with a slight variation that individuals can invest their money in top companies. Though the tenure offered, interest distribution are much like that of FDs, there is risk involved.
3. Hence, it is necessary to run a thorough check on the company's background to make sure that the investment in corporate deposits bears dividend and not go to waste.
4. Small Savings Scheme - Small savings schemes like Public Provident Funds (PPFs), National Savings Certificate (NSC) can be beneficial if one is looking for better returns during the period when the interest rates on FDs are on the downward curve.
5. Apart from offering a higher interest percent, the reason why potential investors can look to invest in PPFs is that it is tax free. As for NSC, though it is taxable and has a lock-in period, the returns are comparatively higher as the interest rate offered by them are high as compared to current FD interest rates.

1. Government Bonds -  Investing in Government bonds is the second most popular option among investors after investing fixed deposits. Though the potential investor puts a lot of thought before investing in government bonds given that it has a long lock-in period and is not user friendly, the returns from it is not too bad.
2. Though it is not significantly higher, the money invested in government bonds doesn't go to waste.
3. Fixed Maturity Plans - Fixed Maturity Plans (FMP) which is very much similar to debt mutual funds as they too invest in debt instruments. Though similar, fixed maturity plans invests the money of the investors only on those instruments that has the same maturity period as that of the FMP.
4. Again, though the returns are high as compared to FDs there is a catch as the money can't be withdrawn until the investment matures.

Though there are many financial investments that offer good returns nowadays they are not without risks. So, it is imperative that the potential investor goes through all the terms and conditions properly prior to deciding on where to invest his/her hard earned money.

Though all the above mentioned options can be considered they are not as safe as fixed deposits and neither do they provide the benefits that are associated with term deposits.

The ones who are looking at investing in other financial instruments apart from FDs can try these as they are comparatively safer and offer slightly higher interest rates in comparison to time deposits.

However, considering the different types of FDs provided by banks and financial institutions, it is hard to look beyond them when one is looking to invest money for guaranteed returns.