Alternative to a Fixed Deposit
Over the last few years, a fixed deposit is not spoken about too much because a lot of alternatives have emerged.
The liquid fund invests in treasury bills and money market instruments. If the investment horizon is less than one year, a liquid fund may be chosen.
Arbitrage funds are hybrid mutual fund schemes with risk-free risk rate rates by exploiting price differences of the same underlying assets in different capital market segments. An arbitrage fund attracts equity taxation, which makes it a viable alternative to a fixed deposit for any period.
Debt Mutual Funds
Debt mutual funds is a scheme that invests in deposits and other money market instruments. If the investment horizon is more than one year, a short-term debt fund with high-quality underlying investments may be chosen.
Conservative hybrid funds
A conservative hybrid combines state and central government bonds with high dividend-paying equities. It generates a decent return if the investment is held for more than 3 years.
The order of the above-mentioned funds also indicates the expected return from low to high expected return. A liquid fund is the lowest followed by an arbitrage fund, debt, and then a conservative hybrid.