Best Interest rate on Fixed Deposit Account

ash.paul

Active Member
#1
Please could some one advise what is the top Bank or Co-operative Society or an Financial Institution etc offering best rate of return on a lump sum for a period of 10 years.

I am planning to fix an amount of 85 lacs for a long period with the possibility of recurring interest getting compounded.

PS: I am not interested in index or equity linked instruments as I am strictly interested in risk free or say minimum risk (even Banks or a country can go bankrupt :)

Thanks
 
#2
the amount is not even so called big amount..its very big big amount.people may not have that amount( u just want to confirm returns safely) is that the question??
 

DSM

Well-Known Member
#3
Ash.Paul,

You say that you are looking to invest in risk free or minimal risk return, so you forego Index or Equity Linked Instruments, which is fine... But then you are willing to take huge risk of investing in a co-operative bank FD - which has I believe a extremely rare but possible chance of returning 1 lac of the 85 lac principal - thanks to statutory insurance cover... With Financial Institution - not even that....

No investment is without risk - In your place, I would forego the few extra points with Co-op bank FD and instead diversify FD's with different AAA rated banks which return approx 7.50% compounded (subject to TDS) but refund if NRI (do check with CA). Other govt. investments such as National Saving Certificate returns 8.10% (no limit), PPF returns 8.10% with a max of Rs. 1.5 lac/year, Postal MIS returns 7.80% upto 4.5 lacs. The interest rates are simple interest and would have possibly changed. Do check... My 2C.

Please could some one advise what is the top Bank or Co-operative Society or an Financial Institution etc offering best rate of return on a lump sum for a period of 10 years.

I am planning to fix an amount of 85 lacs for a long period with the possibility of recurring interest getting compounded.

PS: I am not interested in index or equity linked instruments as I am strictly interested in risk free or say minimum risk (even Banks or a country can go bankrupt :)

Thanks
 

ash.paul

Active Member
#4
the amount is not even so called big amount..its very big big amount.people may not have that amount( u just want to confirm returns safely) is that the question??
I have not claimed the amount to be big or small, its irrelevant anyway. Thought, my question was pretty simple and clear, as I am unware of the situation in India, what is the highest returns you could get today if I were to lock that amount for guaranteed return a long tenure ideally re-investment based compounding.

thanks
 

ash.paul

Active Member
#5
Ash.Paul,

You say that you are looking to invest in risk free or minimal risk return, so you forego Index or Equity Linked Instruments, which is fine... But then you are willing to take huge risk of investing in a co-operative bank FD - which has I believe a extremely rare but possible chance of returning 1 lac of the 85 lac principal - thanks to statutory insurance cover... With Financial Institution - not even that....

No investment is without risk - In your place, I would forego the few extra points with Co-op bank FD and instead diversify FD's with different AAA rated banks which return approx 7.50% compounded (subject to TDS) but refund if NRI (do check with CA). Other govt. investments such as National Saving Certificate returns 8.10% (no limit), PPF returns 8.10% with a max of Rs. 1.5 lac/year, Postal MIS returns 7.80% upto 4.5 lacs. The interest rates are simple interest and would have possibly changed. Do check... My 2C.
Thanks DSM for the helpful advise,

In my little experience, Most Index or Equity Linked Instruments have failed to average a annualized returns of 10% return on a 10-20 years period and sometimes the standard deviation is bit too high which makes the investment quite risky and whats the point when like you have said AAA banks are offering 8% steady return hassle free I would say no need to worry about exits and entry.

I agree anything can default in that case RBI will only protect only 1 lac INR, is that correct but I hope the probabilities of having that overnight are relatively very low.

I must say Tax benefits are relatively better in case of Mutual Funds etc.
Would you kindly explain what you meant by Statutory Insurance cover by Financial institution?

Thanks
 

DSM

Well-Known Member
#6
Ash.Paul

Statutory Insurance is guarantee of principal of upto Rs. 1 lac in case of a bank default/bankruptcy...

For completely risk off investing, diversified bank FD's are the best bet, and co-op bank FD's a complete avoid. (There are cases of money being swindled off by promoters, who disburse depositors funds to themselves, and then join a political party. Nothing will happen to them - they are safe, and the money looted is given a warm welcome in the political party in this case, Pravin Darekar embezzled 123 odd crores and caused bankruptcy of Mumbai District Central Co-operative bank, joined BJP)



Why would one even think of investing in a co-operative bank for extra 1/2-1% return, when the whole principal amount is at risk?


The gauge or standard of safe entry would be PE (Price/Earning) ratios. With little downside, and a greater upside, one can easily beat the FD returns with a great sense of safety.

Also, if looking for returns, one can go back into history and invest a portion of savings in equity in times of panic and scare. This is the Year Avg returns based on PE Multiple :

PE RETURN

Upto 12 55%
Upto 15 28%
Upto 18 20%
Upto 21 06%
Upto 24 -9%
Above 24 -27%

The current PE for NSE is 23.63%



Am by no means advocating equity investments, just presenting facts...

Good luck.





Thanks DSM for the helpful advise,

In my little experience, Most Index or Equity Linked Instruments have failed to average a annualized returns of 10% return on a 10-20 years period and sometimes the standard deviation is bit too high which makes the investment quite risky and whats the point when like you have said AAA banks are offering 8% steady return hassle free I would say no need to worry about exits and entry.

I agree anything can default in that case RBI will only protect only 1 lac INR, is that correct but I hope the probabilities of having that overnight are relatively very low.

I must say Tax benefits are relatively better in case of Mutual Funds etc.
Would you kindly explain what you meant by Statutory Insurance cover by Financial institution?

Thanks
 
#7
Thanks DSM for the helpful advise,

In my little experience, Most Index or Equity Linked Instruments have failed to average a annualized returns of 10% return on a 10-20 years period and sometimes the standard deviation is bit too high which makes the investment quite risky and whats the point when like you have said AAA banks are offering 8% steady return hassle free I would say no need to worry about exits and entry.

I agree anything can default in that case RBI will only protect only 1 lac INR, is that correct but I hope the probabilities of having that overnight are relatively very low.

I must say Tax benefits are relatively better in case of Mutual Funds etc.
Would you kindly explain what you meant by Statutory Insurance cover by Financial institution?

Thanks
Paul ji, I had sent you a personal message regarding this. DSM ji, Curtailing risk is a matter of diversification.
 

TracerBullet

Well-Known Member
#8
Paul ji, I had sent you a personal message regarding this. DSM ji, Curtailing risk is a matter of diversification.
Diversification into crappy assets does not reduce risk. Much better then to invest in Debt Mutual Funds. At least the duration and credit risks are taken by professionals and less chance of getting trapped by fraudsters. Some example of decent funds is BSL Dynamic. UTI dynamic, HDFC Medium term etc etc. If you hold them for 3+ years, you can use indexation to reduce tax.
 
#9
Diversification into crappy assets does not reduce risk. Much better then to invest in Debt Mutual Funds. At least the duration and credit risks are taken by professionals and less chance of getting trapped by fraudsters. Some example of decent funds is BSL Dynamic. UTI dynamic, HDFC Medium term etc etc. If you hold them for 3+ years, you can use indexation to reduce tax.
There is 1 lakh rupees protection in all FDs be it private or scheduled co-op bank. Now sir there are apporx 87 scheduled co-op banks in india. A 1 lakh FD in each would give us a 1/85 chance of one default that too will be protected by insurance. Its basically foolproof. As the gentleman asked for FDs the same advice was given to him.
 

TracerBullet

Well-Known Member
#10
There is 1 lakh rupees protection in all FDs be it private or scheduled co-op bank. Now sir there are apporx 87 scheduled co-op banks in india. A 1 lakh FD in each would give us a 1/85 chance of one default that too will be protected by insurance. Its basically foolproof. As the gentleman asked for FDs the same advice was given to him.
What do you mean by 1/85? Can multiple coop banks not default? Will insurance cover each bank? And when there is default, how long do you think it will be before the insurance pays back and will they pay my interest ?

Anyway, i dont see any rationale of investing in them, given their questionable management and track record. Why will i take all of this hassle, Debt Mutual Funds have given me 9 -11 % annualized returns for few years. This will reduce in future but real returns ( Interest - inflation) should still be fine. I see my capital much more secure and diversified in them. I also get indexation after 3 years.

i cannot see why he should take risk with these banks for mediocre returns, when Thread starter does not even want to take risk in equity (which i think should be reconsidered as investment is for 10+ years. i have much more returns from equity than debt over last 10 years and it is more than 10% compounded).
 

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