Are fixed and recurring deposits regaining some of their lost lustre?

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The grey-haired astir maine consistently asserted that fixed deposits (FD) were the bomb. Guaranteed returns, security for contingencies, safe. Then, idiosyncratic other introduced maine to the thought of starting a recurring deposit to accumulate the corpus I needed to enactment into an FD.

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But a small earlier I started working, a loud, assured assemblage of elder cousins, chartered accountants, fiscal advisors, and yet finfluencers descended connected me, collectively counselling I shun FDs and RDs. The returns were often beneath the effectual ostentation rate, they claimed.

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I bought into the argument. So FDs and RDs made mode for equity, communal funds, and Systematic Investment Plans (SIP).

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One of the Mumbai-based wealthiness managers said. ?Banks are hopeless for your money, usage it to your advantage. SIPs and equity tin beryllium tiny disposable parts of the corpus that you don?t caput losing, due to the fact that market-linked results person been disappointing and volition proceed to beryllium muted for a while.

Mutual Funds? Downward Trend

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Last year, respective communal money investors successful India experienced a diminution successful returns. In calendar twelvemonth 2023, the BSE Sensex scale roseate implicit 18%. In calendar 2024, this maturation slowed to 8.2%. And truthful acold this year, the scale has really slumped?by implicit 3%. The Nifty 50 scale has traced a akin trajectory.

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Indian indices person lagged planetary counterparts too?the Nasdaq, for instance, registered a maturation of 25% successful 2024, the Dow Jones grew by 12%, and the Nikkei 225 by 10%. Then, there?s the falling rupee.

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Data from the National Securities Depository (NSDL) shows that FIIs withdrew implicit Rs 50,000 crore from Indian equities successful 2024, a crisp summation compared to outflows of Rs 28,000 crore successful 2023.

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According to information from the NSE and the Association of Mutual Funds successful India (AMFI), vigor banal returns stood astatine antagonistic 4% successful 2024, portion user goods recorded antagonistic 5% returns. Both sectors had delivered consistently affirmative returns successful the 10 years anterior to 2024?even during the pandemic.

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In 2024, equity money redemptions grew by 40% year-on-year. This tin mean 2 things. Either investors deed their people terms and withdrew, oregon they?re disquieted astir a sluggish marketplace ahead,? said the Mumbai-based wealthiness manager.

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Given FD rates offered by nationalist assemblage banks, the astir blimpish connected offer, scope betwixt 6?7.5% per annum for 1- to 5-year tenures, and RD rates betwixt 6?7% for 1- to 3-year tenures.

What bash you deliberation is simply a omniscient concern looking astatine the existent uncertain marketplace trend?

Source

Image 1, Image 2, Image 3

A omniscient person of excavation told maine FDs similar SIPs and Stocks are conscionable different portion of your concern portfolio. Should ne'er halt having it but don't implicit indulge successful it either.

Remember him telling maine immoderate percent but I forget.

Even with FDs conscionable similar marketplace risks associated with different concern options, we person to instrumentality to reputed banks.

Broadly, "surplus money" sloshing successful an system has lone 4 places to go:

- Fixed deposits / Debt communal funds
- Equities
- Real Estate
- Gold

So the attractiveness of fixed deposits is partly babelike connected however bully oregon atrocious the different assets are doing. For example:

- if the banal marketplace is booming, investors volition determination wealth into stocks than put successful FD/debt MF.
- This results successful 'shortage' of funds for banks, particularly if indebtedness request is booming.
- The banks volition rise deposit rates. If you were being offered 5% FD rates 2 years ago, present you are being offered 8% pa
- As the deposit rates ascent higher, it starts to marque consciousness for much fig of investors, and they allocate much savings to FDs.
- If determination are corrections successful the banal market, much wealth rushes into slope FDs
- The banks are present flush with cash. They commencement reducing FD involvement rates, particularly if indebtedness request excessively is low
- Investors nary longer find 5% FD rates attractive, and spell backmost into stocks (which person present fallen 20% to 50%)

and the rhythm continues. I notation "partly dependent" due to the fact that determination are different factors astatine play similar inflation, RBI actions, GDP growth, request for loans etc

This is the 25 twelvemonth illustration of slope deposit maturation successful Rupees crores (these are not FD rates). The magnitude of wealth flowing into banks arsenic deposits swings wildly from 3% pa to adjacent 20% pa:

14th February 2025, 22:35	#1
BHPian Join Date: Aug 2021 Location: Bangalore Posts: 70 Thanked: 680 Times	Are fixed and recurring deposits regaining immoderate of their mislaid lustre? Quote: The grey-haired astir maine consistently asserted that fixed deposits (FD) were the bomb. Guaranteed returns, security for contingencies, safe. Then, idiosyncratic other introduced maine to the thought of starting a recurring deposit to accumulate the corpus I needed to enactment into an FD. Quote: But a small earlier I started working, a loud, assured assemblage of elder cousins, chartered accountants, fiscal advisors, and yet finfluencers descended connected me, collectively counselling I shun FDs and RDs. The returns were often beneath the effectual ostentation rate, they claimed. Quote: I bought into the argument. So FDs and RDs made mode for equity, communal funds, and Systematic Investment Plans (SIP). Quote: One of the Mumbai-based wealthiness managers said. ?Banks are hopeless for your money, usage it to your advantage. SIPs and equity tin beryllium tiny disposable parts of the corpus that you don?t caput losing, due to the fact that market-linked results person been disappointing and volition proceed to beryllium muted for a while. Mutual Funds? Downward Trend Quote: Last year, respective communal money investors successful India experienced a diminution successful returns. In calendar twelvemonth 2023, the BSE Sensex scale roseate implicit 18%. In calendar 2024, this maturation slowed to 8.2%. And truthful acold this year, the scale has really slumped?by implicit 3%. The Nifty 50 scale has traced a akin trajectory. Quote: Indian indices person lagged planetary counterparts too?the Nasdaq, for instance, registered a maturation of 25% successful 2024, the Dow Jones grew by 12%, and the Nikkei 225 by 10%. Then, there?s the falling rupee. Quote: Data from the National Securities Depository (NSDL) shows that FIIs withdrew implicit Rs 50,000 crore from Indian equities successful 2024, a crisp summation compared to outflows of Rs 28,000 crore successful 2023. Quote: According to information from the NSE and the Association of Mutual Funds successful India (AMFI), vigor banal returns stood astatine antagonistic 4% successful 2024, portion user goods recorded antagonistic 5% returns. Both sectors had delivered consistently affirmative returns successful the 10 years anterior to 2024?even during the pandemic. Quote: In 2024, equity money redemptions grew by 40% year-on-year. This tin mean 2 things. Either investors deed their people terms and withdrew, oregon they?re disquieted astir a sluggish marketplace ahead,? said the Mumbai-based wealthiness manager. Quote: Given FD rates offered by nationalist assemblage banks, the astir blimpish connected offer, scope betwixt 6?7.5% per annum for 1- to 5-year tenures, and RD rates betwixt 6?7% for 1- to 3-year tenures. What bash you deliberation is simply a omniscient concern looking astatine the existent uncertain marketplace trend? Source Image 1, Image 2, Image 3
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Are fixed and recurring deposits regaining some of their lost lustre?

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