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What's the best for an investor?
Published On , 28 Aug 2017 By ET Wealth
Competing investment products like fds & fmps, Liquid Funds & savings bank accounts, gold & gold etfs could confuse investors
Often investors are confused about which competing products to select from in a particular situation. For example, whether to put money in fixed deposits, mainly of three-year maturity or bank FDs of similar maturity. Should one opt for Liquid Funds or savings bank account? Is buying physical gold better than buying gold ETFs? Here are some comparative tables to help investors have some basic idea about those products.
FMP: These are most tax-efficient when you invest for at least three years or slightly more. Anything less, the tax incidence is at par with FDs. But liquidity is a problem in FMPs.
FDs: One of the most popular financial products, but do not create wealth as rate of interest is at par or only marginally higher than inflation rate.
Liquid Funds: Ideal for parking of funds for the short term. Given recent slashing of savings bank interest rate, these funds have become more attractive.
SB account: The bank account that gives very high liquidity but very low rate of interest, even less than the rate of inflation.
Gold and gold ETFs: Physical gold, despite several disadvantages as an investment vehicle, is immensely popular but ETFs are slowly gaining investor confidence as a substitute for gold because of safety, no question about quality, ease of storage and investment etc.
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