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Ramalingam Kalirajan |11028 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jan 27, 2026

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Vijay on Jan 25, 2026Hindi

On fd i am getting only 7 present. Where i will get more intrest than bank deposit.

Ans: You are rightly questioning whether keeping money at around 7 percent is efficient, especially when inflation and tax reduce real returns. This thinking itself helps wealth grow steadily.

» First, understand the trade-off clearly
– Higher return always comes with higher risk
– Bank deposits give safety but poor post-tax growth
– The goal is not chasing the highest rate, but improving risk-adjusted return
– Money should be placed based on time horizon and purpose

Once this is clear, decisions become calm and logical.

» Better alternatives to bank deposits for stable money
– High-quality debt-oriented mutual funds can give better post-tax efficiency
– Returns may look similar on paper, but taxation works in your favour
– Suitable for money needed after 2–3 years or more
– Liquidity is higher compared to fixed deposits

These are good substitutes for medium-term deposits.

» Corporate fixed-income instruments – caution needed
– They offer higher interest than bank deposits
– Credit risk exists and cannot be ignored
– Avoid concentrating large amounts in one issuer
– Only suitable if you understand the risk fully

Higher return here is compensation for higher uncertainty.

» Equity-oriented investments for long-term money
– Equity is the only asset that can clearly beat inflation over time
– Best suited for goals beyond 5–7 years
– Volatility is normal, but long-term trend is positive
– SIP route reduces timing stress

This is not a replacement for FD, but a growth engine.

» Why actively managed mutual funds are better than index funds
– Index funds move exactly with the market, up and down
– No protection during market falls
– No flexibility to avoid weak sectors
– Active fund managers aim to control downside and rebalance

In uncertain markets, judgement matters more than automation.

» Tax reality you should not ignore
– FD interest is fully taxable every year
– Debt mutual fund gains are taxed only on withdrawal
– Equity mutual funds get favourable long-term taxation
– Post-tax return matters more than headline rate

Many investors lose money only because of tax ignorance.

» How to restructure FD money smartly
– Keep emergency fund in bank deposits
– Short-term needs can stay in safe debt options
– Long-term surplus should gradually move to equity mutual funds
– Avoid shifting everything at one time

Gradual movement keeps peace intact.

» What to avoid while chasing higher interest
– Avoid unregulated schemes promising high returns
– Avoid concentrating money only for interest income
– Avoid locking long-term money without exit flexibility

Safety plus growth must go together.

» Finally
– Bank deposits are fine for safety, not for wealth creation
– Better post-tax returns are possible with proper asset allocation
– Actively managed mutual funds suit long-term goals well
– A mix of debt and equity works better than chasing interest
– The right structure beats the highest interest rate

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.