With demonetization law coming into action, investment market when down where as banks started witnessing cash overflow in savings accounts of almost every Indian resident. Even when withdrawn, a sizable portion is most likely to remain with the banks. This unwithdrawn cash is supposed to earn a minimum interest of 4% per year, which is 6% in some of the banks. Where only Rs.10, 000 per year in savings account is tax free, keeping 2.5 lakh or more in bank accounts is not a good idea. However, there are quite many ways, through which you can not only earn better returns, but also bag the market benefits.
Earn interest up to 7%- 8% with liquid fund investment schemes. These schemes are yet another one of the safest funds to invest in. Mutual Fund investors, who are KYC registered, can reap benefits of begin taxed at lower rate. They are more flexible than Bank FDs, and allow you to withdraw small amounts or invest more, whenever desired. With investment industry going online, making an investment has become effortless. Not just the investment is liquid; the risk of losing money is considerably low.
Though, it might not look like one of the catchiest options to go with, Bank FDs comes at 6% to 7% interest rates. It is easy to open and tops the chart of one of the safest investment options which is backed up by the Government of India. Flexible in nature, bank FD allows you to choose and fix the tenure of deposit and withdraw anytime, when desired. In case of premature withdrawal, investor has to give small penalty. However, there are many banks who do not levy charges at premature withdrawals.
Invest in income funds and earn returns from 8% to 9%. You can avail profits by investment in interest paying securities or diversified pool of dividend. The returns are higher than that of mutual funds, but come with payable exit load when re-deemed before minimum investment period, which could vary from fund to fund. Therefore, it is always advisable to check the exit load before opting to invest in income funds. When held for longer period, income funds offer higher returns than fixed deposits.
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