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I Want To Invest In Fixed Deposits (FDs)..Is Now Still a Good Time?

This is a very topical issue as many of us are considering investing in tax saving FDs before the end of the tax year in March 31.

The situation has changed over the past couple of weeks, since the RBI announced policy measures to reduce interest rates. While on the upside lower rates help home and auto loan borrowers, on the downside lower rates also reduce the rates that FDs will provide investors.

We expect that in the coming weeks FD rates will come down by anywhere between 1% - 2% depending upon the tenure of the deposit. Clearly, these returns are less attractive than they were just a month ago. Additionally, if interest rates in India continue to decline, FD rates will also come down, making FDs less appealing.

Of course, if you do not want to take risk and want to park some of your money in a secure way, FDs are probably still your best option. If you can wait till towards the end of the financial year towards March 31, you might even get higher rates because banks generally offer better rates towards the end of the financial year.

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jayant said : 29/06/2010	This Information really very helpful.
Parul Hariya said : 06/06/2010	thanks for this valuable suggestion on this site