Where your grandpa invested

There was no talk of investing in the stock markets in grandpa’s time. Any extra money had to be invested in one of the three avenues - fixed deposit, real estate and gold. Investing in real estate and gold required some patience, and there was no certainty about the rate of return. Even today, for steady returns, unaffected by any future changes in interest rate, you have to look for Best Fixed Deposit scheme in India. Fixed deposits attract Income tax, whereas real estate and gold are liable for Capital Gains Tax.

• Fixed Deposit Investment

Today, Fixed Deposit investment schemes are offered by banks, post office and also under Company Fixed Deposit schemes.

Rate of Interest & Compounding Frequency

A scheme with a higher rate of interest will give you better returns. But Compounding Frequency is significant here. If rate of interest and all parameters are same, then the scheme that compounds more frequently will give better returns.

Duration

Longer investments mean greater returns. However, interest rates rise for deposits in Indian banks up to 1-year duration, and thereafter taper off. Therefore, take note of the interest rate before investing.

Taxes

Interest earned by your Fixed Deposit investments is taxable. It is added to your IT Assessment under ‘Income from other sources’, and taxed as per the applicable slab.

Banks can also deduct TDS (Tax Deducted at Source) @10% on the interest earned by your best Fixed Deposit scheme in India. If the Bank has deducted TDS, you still need to pay the remainder tax as per your income slab. If you are a Senior Citizen, you can avoid TDS by submitting Form 15H. If you have no other income source, then you’ll have to submit Form 15G for the bank not to deduct TDS.

Which is the Best Fix Deposit scheme in India?

Now that you have understood how to invest in Fixed Deposit investment schemes, where should you invest?

For a fixed deposit of 3 Months, ING Vysya Bank offers the best interest rate in the market of 8.8%. And for 6 months, it offers 8.7%.

For 1-Year duration, DHFL offers the highest interest rate of 9.5%.

However, to invest in a Fixed Deposit of a longer duration, look no further than Shriram Transport Finance. Its rates for Fixed deposits of 2, 3, 4 and 5 years are 10.23%, 11.34%, 11.94% and 12.58% respectively.

• Real estate Investment

Profits are not guaranteed and your capital is no longer liquid. Since transactions follow a complex procedure, there are plenty of cases of losses and frauds in this sector. But you can play smart, and let your bank do the diligence for you. Once you invest in real estate through a bank loan, your bank will educate you and shield you from all the possible pitfalls and loopholes. Due to locally changing prices and demand-supply cycle, it is not possible to compile a list of the best real estate investment options in the country.

You should consider investing in upcoming Real Estate Investment Trusts for tax benefits as Union Budget 2015 promised.

• Gold Investment

It is not as if gold prices never fall. In the last two years, prices have crashed 20%. Gold prices rally with global uncertainty. Whenever equities go down, you should invest in it but not as jewellery. Gold coins and bars, although preferred for standardization, aren’t as liquid as trading in Gold Exchange Traded Funds. Gold ETFs also make it possible to invest small amounts.

Invest where grandpa did, and maybe you’ll tell stories of your riches to your grandchildren.