Sudden fall in PPF interest rates have forced new and old investors to look into other better returns options, such as Long term mutual funds. Interest rate cut in PPF has come has a shock to investors, who were dependent on fixed income options, such as FD (Fixed Deposits). Here are a few best options to investment in that promises higher and better returns than PPF:
Mutual Funds- Long term mutual Funds
Recent rate cut has offered huge boost to mutual market. Long term mutual funds have become a new lucrative option. Where the returns get tax free after a year of investment, investors are showing more inclination towards low risk debt funds.
Corporate Fixed Deposits
Corporate FDs continue to remain an attractive proposition as the interest rates of these instruments are at elevated levels. However with high return comes the risk that the company can default on its principal and interest payment. One has to be very mindful of this caveat while investing. The best way to avail benefits from Corporate Fixed Deposits, would be choosing FD of AA or above ratings.
Fixed Maturity plans
FMPs invest in fixed income instruments like certificate of deposits (CDs), commercial papers (CPs), other money market instruments, corporate bonds, securities issued by the government, etc. maturing in line with the tenure of the scheme. FMPs are least exposed to interest rate risk and score over fixed deposits because of their tax efficiency.
Tax Free Bonds
Tax-free on the other hand implies income that is not taxable in the hands of investors i.e. the income from such tax-free source is not included in the total income for the purpose of computation of total tax liability. With no income tax being charged on the returns on the tax-free investment no other rebate in the form of tax deduction for the amount invested is provided.