Most investments have given very poor returns since the start of the year. Stock markets have given negative returns over the last 1 year, while interest rates have virtually collapsed. Gold is the only investment that has given very good returns over the last 1 year. Here are some investments that can give decent returns from a short term perspective of 1 year and all of these are debt instruments, where your returns are assured. We have not included equities and mutual funds, due to their uncertain returns.
1. IDFC First Bank Savings Bank Account
At the moment, government owned banks, give you an interest rate of 5.0 to per cent to 5.75 per cent on fixed deposits. If you simply have a balance of more than Rs 1 lakh in the savings bank account of IDFC First Savings you get an interest rate of 7 per cent. If your balance falls below Rs 1 lakh, investors are entitled to an interest rate of 6 per cent.
You get several other benefits like unlimited free fund transfer, free visa classic debit card for life.
Remember, interest income from savings bank accounts is exempt from tax upto Rs 10,000. The bank is relatively safe, as IDFC was one of the renowned infrastructure development finance companies in the country.
2. KTDFC Fixed Deposits
KTDFC is a government of Kerala undertaking, also called Kerala Transport Development Finance Corporation. The fixed deposits are guaranteed by the government of Kerala and are hence very safe.
A 1, 2 and 3 year fixed deposit fetches an interest rate of 8 per cent. At the moment, it is difficult to find any government institution that offers 8 per cent interest rate. On a 3-year deposit the yield offered by the institution works to almost 9 per cent. Senior citizens are entitled to an extra interest rate of 0.25 per cent. Company fixed deposits attract a TDS if the interest amount exceeds Rs 5000 every year.
3. IndusInd Bank Fixed Deposits
If you are looking to invest for a period of 1 year, the fixed deposits of IndusInd Bank offer an interest rate of 7 per cent on its fixed deposits.
The bank also has deposits that offer 7 per cent for a slightly increased tenure of 2 years as well. Very few banks at the moment, apart from Yes Bank offer 7 per cent on their fixed deposits. Senior citizens are being offered an additional interest rate of 0.50 per cent on the deposits.
The yields on the deposits would be slightly higher, given that banks compound interest rates every quarter. Once you book an FD online, you also get a Covid-19 insurance cover of Rs 25,000 through Reliance General Insurance
4. LIC Housing Finance Fixed Deposits
For a short term period of 1 year, LIC Housing offers an interest rate of 7 per cent. The deposits are AAA rated, which means a high level of safety. One can approach a broker like Bajaj Capital or Bluechip Investments to help with opening the FD. These brokers have branches throughout the country.
LIC Housing is promoted by LIC and hence the deposits are safe. At the moment, it is very difficult to get 7 per cent returns from a reputed institution. It is advisable not to block money for long term duration and stick to one year only.
About the author
Sunil Fernandes has spent 25 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds, debt instruments and tax planning.