Liquid Funds
Used as an alternative option to savings bank. Invest in money market instruments and have a lock-in period of a maximum of three days and offer redemption proceeds within 24 hours.
YIELD: 6.88 per cent*
Floating Rate Funds
These invest in floating rate instruments and fixed rate corporate bonds. For investors who want to reduce risk due to interest rate fluctuations.
YIELD: 6.90 per cent*
Fixed Maturity Plans
These, typically, are plans for a fixed tenure ranging mostly from 15 days to three years. They mostly invest in fixed income instruments (bonds, government securities, etc.) and money market instruments such that the fund matures in the same period. Over one-year FMPs are best because they can take advantage of indexation.
YIELD: 6.61 per cent*
Bond Funds
Targeted towards investors with a low appetite for risk and for whom safety and returns are paramount. These pay income regularly and their NAVs typically fluctuate less than those of an equity fund. They invest in corporate papers, GoI papers, money market instruments and call papers.
YIELD: 5.24 per cent*
Gilt Funds
They invest exclusively in government securities, including state government securities and treasury bills. They are safe and yield better returns than direct investments in these securities.
YIELD: 4.83 per cent*
Public Provident Fund (PPF)
It is a savings-cum-tax saving instrument. Also serves as a retirement planning tool due to its 15-year tenure. Maximum annual deposit limit of Rs 70,000, but interest is tax-free. Early withdrawals are possible after the end of five years, and it makes a good tax-saver scheme.
Rate of return: 8 per cent
National Savings Certificate (NSC)
These are issued by the post offices in denominations of Rs 100, Rs 1,000, Rs 5,000 and Rs 10,000 issued for a maturity period of six years. Early encashment is not permissible.
Rate of return: 8 per cent
Kisan Vikas Patra (KVP)
Doubles your money in eight years, seven months (returns exempt from TDS) and comes in denominations of Rs 100, Rs 500, Rs 1,000, Rs 10,000 and Rs. 50,000. Early encashment is not permissible.
Rate of return: 8 per cent
Post Office Monthly Income Scheme
Offers a return of 8 per cent, payable in monthly installments. Good for investors looking for a safe monthly income. However, the upper limit for investment is Rs 6 lakh, but there are no loan facilities.
Rate of return: 8 per cent
Government of India Bonds (Taxable)
These have a five-year tenure and are offered by the Government of India, which carry a sovereign guarantee.
Rate of return: 8 per cent
Rising interest rates have ensured that banks are once again offering double-digit interest rates (10-10.25 per cent) mostly on short-term deposits ranging from a few days to a little over a year. Short-term bank deposits have once again become a viable option for people willing to park their funds safely for short durations.
Rate of return: 10.25 per cent
*Average annual yield (last four quarters)
These figures do not factor in actual return to an individual investor as taxation with or without indexation and/or capital gains are not considered