With the stock markets hovering around the precariously high 6,000 levels, investors have been left wondering where they should invest in the current scenario. But all's not lost.
An anticipated event has just occurred: some financial institutions accepting fixed deposits have increased 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.
We present a few pointers which fixed deposit investors must consider at the time of investment:
1. Safety
Fixed deposits have conventionally been the premier choice for investors who do not want to take risks. Assured returns are the key factor that attracts investors towards deposits. Stick to fixed deposits of the highest credit rating, i.e. those with an 'AAA' rating even if their rates seem modest vis-à-vis those offered by company deposits.
Company deposits are unsecured in nature and investing in them would imply taking on disproportionately higher risk. If, as an investor, you are open to investing in instruments involving higher risk, market-linked instruments like mutual funds may not be a bad deal.
2. Tenure
Short-tenured fixed deposits continue to be your best bet. With
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