Do you have extra money lying around that you want to invest safely, without having to worry about a loss on your investment? Fixed Deposits are similar to Certificates-of-Deposits (CD), you deposit money with a bank for a specified period of time. The money cannot be withdrawn during that time period without paying a penalty, but the deposit is fully guaranteed by the bank unlike riskier investments like stocks and mutual funds. The good thing about Fixed Deposits is that unlike CD’s in the United States which are currently paying less than 1% interest, Fixed Deposits in India pay interest rates that are much higher.
As mentioned above, Fixed Deposits are fully guaranteed by the issuing bank. While there is minimal risk of loss as long as you invest with a reputable and insured bank, it is best to play it safe and invest with a large bank for added security. To give you an idea of what kind of returns you can expect when investing in Fixed Deposits, the following rates are currently being offered by the “Big Four”, the four largest banks in India.
State Bank of India
Term: 1 year Interest Rate: 9.25%
Term: 6 months Interest Rate: 7%
Term: 3 months Interest Rate: 7.25%
ICICI Bank
Term: 1 year Interest Rate: 8.25%
Punjab National Bank
Term: 1 year Interest Rate: 9.25%
HDFC Bank
Term: 1 year Interest Rate: 9.00%
Term: 6 months Interest Rate: 7.75%
Term: 3 months Interest Rate: 7.25%
National Savings Certificates
Another risk free option for investors looking for a more long-term investment are National Savings Certificates. These are fully guaranteed by the Indian government and can be compared to United States Treasury Bonds. National Savings Certificates can be bought at any national bank in India. The certificates have a maturity period of six years and any early withdrawals are penalized. National Savings Certificates pay a nominal interest rate of 8%, which is compounded semi-annually for an effective interest rate of 8.16%.
Real-estate
Both of the above investment options are available to foreigners. The above-average returns and minimal risk make them a great option for the conservative investor. Another investment option that offers even greater potential returns is real-estate. Real-estate is known as the “money making industry” in India. Smart investors have been seeing returns of 30% to upwards of 100% for years investing in real-estate.
India is the world’s second largest country based on population and projections call for India to surpass China as the most populous country in the world by 2030. The growing population and emerging middle class mean more people than ever will be looking to build a home or to start a business. With the Indian economy also picking up steam again after the recent global recession there couldn’t be a better time to get involved in India’s booming real-estate sector than right now.
As with all investments, remember to do your own due diligence prior to investing, and don’t invest more than you can afford to lose.
