Today I met a person in a restaurant who was sitting in front of me. Meanwhile by looking at my ID card, the man guessed that I am working in bank and he started talking about banking and finance. First I didn't give much attention to his speech, but later when I discovered that he lost his money in stock market due to blind investment, I felt pity on him. He was simply repenting on investing in the stock.He started with a small sum, got a little bit of gains and started to play with it and now he is almost lost with it.
Then I thought about writing something about our present economy. The present economic conditions bespeaks the bad omens of near future. Indian stocks are also getting badly affected by the worldwide economic conditions. RBI has already increased the Repo and Reverse Repo rates in order to reduce the skyrocketing inflation. Heads of major banks in India, had requested RBI not to increase the rates further, but everything went to vain. Following the decision from RBI, all major banks have increased the interest rates on deposits and loans.
The quarterly financial results (for the quarter ended in June 2011) of many companies have been turned up in newpapers these days. Automobile sales is coming down. Last week, the annual sales volume report of automobile manufacturers revealed the same. Leading automobile manufacturers- Maruti, Hyundai and Tata Motors are much affected by the interest rate changes. Reason is simple: Interest rates go high. People stay away from vehicle loans. No loan means a big stop to the dreams of buying a car. The demand goes down. And the automobile manufacturer starts to suffer.
That is the case of automobile. And now take the case of housing loan. Housing loan belongs to Priority sector advances in Indian economy. Because food and shelter is inevitable for human beings and nobody should be deprived of getting these. But what if the price of building materials go high ? What if the housing loan interest rates go high ?
On the other hand, the food price index has started going down again. But are we getting the food items at a lower rate than before ? No. Because oil price in the international markets are going high again. In turn the goods transportation charges go high. So if any factor makes the price down, some other factor keeps the price up.
And in between, the typical Indian investor runs to make profits- invests in equities, invests in mutual funds, invests in gold...
So dear Indians, where are we now ? Are we going down or going up ?
As always, there are hot discussions happening among financial experts on economic stability- something which we lack now. People spend much time thinking about the best investment option.
In my opinion, it is always good for us to be in safer side of finance. And I would like to recommend two options- Either go for bank deposits or invest in gold. In the case of bank deposits, the interest rates are in pretty peak position and it is highly likely that the rates wont go higher than present.
Therefore, it makes sense to open a fixed deposit account for a longer tenure now so that you can take benefit of these high interest rates for a long time - even if the rates reduce in between. Try to open a fixed deposit account for 3-4 years so that you can lock into the high rates. For even higher rates, you can consider the "special" FDs offered by many banks, like a 390 or 1000 day FD.
Here are the interest rates for deposits offered by some of the banks. (Remember, senior citizens usually get 0.5% more than these rates)
| Bank Name | Interest rate | Duration |
| Tamilnad Mercantile Bank (TMB) | 10.50% | 620 days |
| Federal Bank | 10.00% | 333 days |
| Oriental Bank Of Commerce (OBC) | 9.80% | 1-2 years |
| State Bank Of Patiala (SBP) | 9.75% | 555 days |
| State Bank Of Mysore (SBM) | 9.75% | 500 days |
| Kotak Mahindra Bank | 9.60% | 700 days |
| Punjab and Sind Bank (PSB) | 9.60% | 1000 days |
| State Bank Of Travancore (SBT) | 9.60% | 500 & 1000 days |
| Syndicate Bank | 9.55% | 1-2 years |
| State Bank Of Hyderabad (SBH) | 9.50% | 1000 days |
| ING Vysya Bank | 9.50% | 366-500 days |
| Corporation Bank (CorpBank) | 9.50% | 1-2 years |
| IDBI Bank | 9.50% | 500 days, 7-10 years |
| Canara Bank | 9.50% | 366-554 days |
| Jammu & Kashmir Bank (JK Bank) | 9.50% | 500 days |
| Bank Of India (BOI) | 9.50% | 1-2 years |
| IndusInd Bank | 9.50% | 400 days |
| State Bank Of Bikaner and Jaipur (SBBJ) | 9.50% | 3-5 years |
| Punjab National Bank (PNB) | 9.50% | 1111 days |
| Central Bank Of India | 9.40% | 555 days |
| Bank Of Baroda (BOB) | 9.35% | 444 das |
| Vijaya Bank | 9.35% | 2-3 years |
| YES Bank | 9.30% | 271 days, 956-960 days |
| Dena Bank | 9.25% | 2-3 years |
| Indian Overseas Bank (IOB) | 9.25% | 3-5 years |
| ICICI Bank | 9.25% | 590,790, 990 days |
| Axis Bank | 9.25% | 366-419 days |
| Indian Bank (IB) | 9.25% | 270-365 days |
| HDFC Bank | 9.25% | 744 days |
As you know, bank deposits have advantages as well as disadvantages. The returns are low as compared to equities. But it is rather risk free and safe option for typical Indian citizen.
If you have still in hand to invest, and you are still bold to take some more risk, go and invest in Gold. In my opinion, you need not go and buy physical gold. Instead invest in any gold fund. Gold ETF's(Exchange Traded Funds) are a good choice. Gold price is going up as always. And do you know the wonderful rule of the present world- price of the gold is inversely or directly proportional to dollar !!. People have chosen gold as investment option for years.
Yet nothing is risk free. Now what is the risk ? If the gold price goes high, there will be corrections at International level. That means, gold price will come down.
So.. Think and Invest.
