Interest rates have fallen so badly, you are unlikely to get an interest rate of more than 7.25 per cent in a government bank. However, if you are a long term investor, you can still get a yield of upto 11.91 per cent on your deposits. Let us tell you where and how.
The rule of compounding
Now since you are getting lower interest rates, the only way to earn higher returns or as one calls it yields, is to place money for a longer term. In Fixed deposits, the interest rate earned in a particular quarter or a year is added to the principle amount, which improves your yields or returns. Now, here are a few FDs, where compounding and the long term tenure can give you a yield of upto 11.91 per cent. These are perhaps one of the best fixed deposits one can consider in 2017.
FDs of Dewan Housing
If you apply for the FDs of DHFL, they can yield you returns of up to 11.91 per cent, after a period for 10 years. The Fixed deposits offer you an interest rate of 8 per cent annually, but, when you compound over a period of time, the returns or yield works to 11.91 per cent. DHFL FDs have a very high rating and is one of the older housing finance companies in the country. So, to that extent your deposits are safe.
This government of Kerala undertaking called KTDFC gives good yields in a short span of 5 years. A 3-year deposit at the company gives you an interest rate of 8.50 per cent and a yield of 9.64 per cent. On a 5-year deposit the yield works to as high as 10.17 per cent. Since this deposit is guaranteed by the government of Kerala, they are very safe.
One can also look at the FDs of PNB Housing, which yields returns of 10.14 per cent over a 120-month deposit. The FDs are very secure as the company is promoted by Punjab National Bank. The 5 year deposits of the company gives an interest rate of around 8.38 per cent, which may not be the best interest rate around. Go for this scheme, if you have a long term perspective of generating higher returns.
Here again the yields work out pretty high, given the law of compounding. These again are highly rated deposits from one of the biggest commercial vehicle financier in the country. The 6-year deposit yields returns of 9.45 per cent, which is not bad at all under the present context.
Similarly, Bajaj Finance, which offers an interest rate around the 8 per cent mark, can yield you returns of excess of 9 per cent on its 5 year deposits. This is not bad at all considering that these are AAA rated deposits and you can make money on compounding yields. Hence, if you are looking at good returns, this could be it.
Deutsche Bank gives you an interest rate of 7.75 per cent per year and an annual yield of 9.36 per cent over a 5-year tenure. This is the best that it can get.
The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.