Though fixed deposits are still the most commonly instruments for making investments, quite a few alternatives to fixed deposits have been gaining mileage and been performing really well for the last few years now. These are:
Debt Mutual Funds
Mutual funds that are invested in comparatively secured investment options like corporate bonds, government securities and money market instruments are referred to as debt mutual funds. These mutual funds are for those investors who do not want to take much risks and want a guarantee of a monthly income after their retirement. Debt mutual funds give a return of equal to or more than fixed deposits without the risk of losing a huge chunk of your money.
These are a type of mutual funds and are great at beating inflation. It requires a portfolio manager to invest the investor’s funds for ownership of a business, which is also known as equities, like common stocks of publicly traded companies. Though these funds carry a higher risk with them, the interest garnered on them is way higher than fixed deposits. Equity funds are perfect for investors who have a high risk appetite. The best way to mitigate the risk attached with equity funds is to opt for long term equity funds.
Corporate Fixed Deposits
For investors willing to take a little more risk, one can choose from corporate fixed deposit options which are nothing, but an FD offered by corporates for investment by the public. The interest rates for a corporate FD is higher than a bank FD with flexible tenure options. The downside to this form of investment is that these are not completely secured as that of a bank fixed deposit and require the investor to do ample research before choosing this. A lot is dependent on the business model of the company.