Bank deposits and company FDs are low risk investments

—Name withheld on request

These are difficult times, and we have to find the best solution in the current circumstances. Bank deposits, or any regular income payments for that matter, are at a much lower level. And given the current interest situation, such a scenario will continue for the next 12-24 months before seeing any increase in interest rates.

Hence, any investment option that you can consider can be done for two years and then it can be renewed hopefully at a better interest rate.

Low-risk investments can be your bank deposits. You can consider post office deposits as their rates are currently higher than bank deposits. You can also consider company fixed deposits with higher credit ratings.

It’s been a month since I left my personal job. I have a provident fund (PF) fund ₹77 lakhs. How long can I keep my PF account live under the given circumstances? If I want to close the account, where can I invest the money? Please suggest some safe ways to invest money to earn regular income that beats inflation. Also please advise how to invest ₹50 lakhs in bank deposits.

-s. Bhatia

PF account can be kept with you till the age of retirement and it continues to earn you interest. However, if there is no contribution in the account, the interest earned on the accumulated corpus will attract income tax at your marginal rate of tax. If you have five consecutive years of service, the corpus is not taxed as long as you were in active employment and becomes taxable only on accruals after your active employment.

And for reinvestment if you plan to do so, you need to realize that a safe investment with low risk can provide you returns equal to inflation, and this is when tax is not included. . This is true for your bank deposits. Also, which may not match inflation at present and is also taxable according to your marginal rate of tax. You need to consider some degree of risk if you want to get inflation-adjusted returns. This may be subject to your risk profile and for moderate risk, you can consider Debt Hybrid Funds and Dynamic Equity Funds with medium to medium risk.

Surya Bhatia is the Managing Partner of Asset Managers.