What are the advantages of alternative investment over savings in banks and fixed deposits
Answers
A few hiccups along the way notwithstanding, it’s more than likely that India is heading for lower interest rates for years to come, if not for decades. In fact, if one steps out of the ivory tower of economists and into the real life of savers, a huge amount of damage has already been done. A measly 2.5 - 3.5% on savings bank deposits and 5-7% on other deposits are going to be the normal from now on.
Most Indian savers—including retirees who need income—are heavily invested in bank fixed deposits. Their earnings have fallen by 25% or more in the last three years. So is there a solution? As it happens, there is. There are mutual fund products that fit the bill perfectly. They not only give you higher returns than the banking products, but are also liable for a lower tax outgo, making the effective return very attractive.