Five good places to put money in now

The Budget has come and gone, with none of the big bang announcements investors were expecting. With the Reserve Bank of India yet to move on the inflation-indexed bonds announced in the budget, here are five available options, one could look at.

Flexi fixed deposits/ short-term FDs: If you are looking to park your money for a short duration, financial advisors suggest a flexi fixed deposit or a short-term FD. This can fetch you returns of 6-7.5% depending on the bank and the tenure. Suresh Sadagopan of Ladder 7 Financial Advisory services rates this option above short-term debt funds and liquid funds.

Corporate deposits: These generally offer 1-3% more than fixed deposits. The rate of interest being offered currently is anywhere between 9% and 12%. But unlike a bank FD, which is insured up to `1 lakh, there is no cushion against default here. So, check the financial health of the company before investing. Moreover, if you think you may need the money any time soon, then CDs may not be the best bet as premature withdrawal can be costly, with the penalty as high as 2%.

Fixed maturity plans: February and March have seen new fixed maturity plan (FMP) offerings. Going by Kalpesh Ashar, CFP, Full Circle Financial Planers & Advisors, investors should take advantage of the double indexation benefit available with these products. Indexation takes inflation into account while calculating the cost of acquisition of an asset. Double indexation provides inflation benefits for two years even though you have held the investment for a little over one year. Currently, the indicative rate of interest being offered on FMPs is anywhere between 9.25% and 11.5%

Tax-free bonds: If you are a conservative investor, then tax-free bonds issued by PSUs are a good option. Currently, there are several such bonds available in the market – Power Finance Corporation, Hudco, REC, IRFC, IIFCL, to name just a few. The returns on these bonds are in the 7-8.5% range. But considering the returns are tax-free, the effective yield increases and therefore it emerges as a good option for people in higher tax brackets.
However, remember that these bonds are for a period of 10-15 years and so you should go for it only if you afford to lock your money for so long.

Others: Among other avenues, Public Provident Fund and mutual fund investments via the systematic investment plan route still tops the charts.

@Nupursays