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FDs, now moving with the times!
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personalfn.com
Fixed income instruments are often condemned by critics on the grounds that in a rising rate scenario (like the present one), assured returns lead to a notional loss for investors. While investors in freshly issued instruments rake in returns at higher rates, existing investors continue to languish with lower returns at historical rates. Effectively the instruments' characteristic feature i.e. "assured returns" turns into a detriment.
A checklist for today's FD investors
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personalfn.com
With the equity markets hovering around the precariously high 6,000 levels, investors have been left wondering where they should invest in the current scenario. In the meanwhile another anticipated event finally occurred; some financial institutions accepting fixed deposits (FDs) hiked the rates on their offerings. This makes fixed deposits attractive propositions not only from the short-term investment perspective but also to park funds until better opportunities are thrown up by the equity markets.
Where to invest in times of inflation?
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personalfn.com
First, let's demystify the jargon. Inflation is a situation where there is 'too much money chasing too few goods'. In such times buyers bid up prices of scarce products/services. The scarcity could be caused by supply issues or a faster than expected rise in demand. Irrespective of what causes inflation, the impact is the same. The value of the currency you are holding declines.
Inflation-proof bonds on the way!
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personalfn.com
The security and comfort associated with assured return schemes comes at a price - inflation! Inflation in simple terms means a rise in the general price levels or cost of living. Inflation eats into the returns offered by assured return schemes like fixed deposits and small savings schemes, thereby leaving investors with dismal real returns.
Small savings: The rationalisation continues...
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personalfn.com
For investors in the small savings segment, Union Budget 2004-05 proved to be a windfall. Contrary to popular perception, returns on schemes like National Savings Certificate (NSC) and Public Provident Fund (PPF) were left unchanged. However recent amendments to the rules governing the small savings segment suggest that the rationalisation process is very much on; albeit the manner in which it is conducted has changed.
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