Evaluating The Essence Of Conventional Instruments

In this era of equity, mutual funds and systematic investment plans (SIP), the relevance of fixed deposits (FD) as an investment tool is often questioned. But surprisingly with low and declining returns it is still the most trusted route to park money for most Indians. In fact, not only FDs but also other traditional asset classes like the National Savings Certificate (NSC), Kisan Vikas Patra (KVP) are facing stiff competition from their modern counterparts. As per a recent Sebi survey, more than 95 per cent Indian households prefer to park their money in bank deposits, while less than 10 per cent opt for mutual funds or stocks. The survey further noted that, life insurance was the second most preferred investment vehicle, followed by precious metals, post office savings and real estate. The data clearly indicates that though FDs do not factor in inflation, yet it is a preferred tool...