I’ve some short-term targets which can be due in three years. What are the low-risk funding choices that may defend my capital and in addition get me higher post-tax returns?
—Name withheld on request
For your short-term targets, it’s prudent to contemplate investments in debt devices completely. Here, we’ll listing a number of choices apart from financial institution mounted deposits (FDs ) the place you may make investments and probably earn barely larger post-tax returns.
Debt mutual funds: You can spend money on funds inside classes reminiscent of company bond funds, banking and PSU funds, and short-term funds. These funds usually provide a greater return profile in comparison with mounted deposits, and their post-tax returns are sometimes extra beneficial since tax incidence happens solely upon redemption.
Corporate FDs: Another choice is to spend money on company FDs supplied by deposit-taking non-bank monetary corporations (NBFCs) like Bajaj Finance and Shriram Transport. These investments can probably present larger returns than conventional financial institution FDs.
Corporate bonds: These include various ranges of threat and returns. High-quality company bonds with minimal threat can yield returns within the vary of 7-8.5%. If you might be open to assuming barely larger threat, you may take into account secured bonds, which can provide returns within the vary of 9-12%.
These choices present alternate options to financial institution FDs that will provide higher returns whereas nonetheless sustaining a deal with security and liquidity. It’s vital to fastidiously assess your threat tolerance and funding horizon earlier than making any selections. Additionally, take into account consulting a monetary advisor for personalised steerage.
Vijay Kuppa is chief govt officer of InCred Money (previously Orowealth)
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Updated: 25 Sep 2023, 10:34 PM IST
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