[girishglg]

Now banks are offering innovative products under FD such as ING Vysya FD+ which has some innovative features-

• No pre closure penalties
• Withdrawal of FD using ATM

Source : ING Fixed Deposit Plus

These are close to the heels of other banks such as YES Bank increasing the rates of Savings account which is currently the highest in the industry

[raksrules]

Bumping an old thread.

My father in law doesn't invest in anything except FD. He has invested my wife's money also in FD. Now one of her FDs maturing in May and I don't want to continue with FD in same bank (bank of baroda). I instead want to put money in a higher interest FD like say Shriram Transport Finance or the Tamil Nadu Power Finance FD (Link below).

Is it safe to invest in FD of these. I am aware shriram transport finance has been in existence for long and is highly rated and latter one is Government Enterprise.

[Vizay]

Originally Posted by raksrules

Is it safe to invest in FD of these. I am aware shriram transport finance has been in existence for long and is highly rated and latter one is Government Enterprise.

If safety worries, have you considered RBI floating rate bonds? Lock-in period of 7 years. Their rate is linked to small savings scheme interest rates and are taxable. Currently it works as 7.1% interest or so (much better than most banks).

[deepak_misra]

Originally Posted by raksrules

Bumping an old thread.


Is it safe to invest in FD of these. I am aware shriram transport finance has been in existence for long and is highly rated and latter one is Government Enterprise.

It is good to research before investing more so if you have row appetite for risk

https://freefincal.com/tamil-nadu-po...ware-of-risks/ might be more pessimistic but you need to be aware before taking a decision

In general when someone is offering high interest in a low interest environment it means they are taking much higher risk and chances of losing your capital could be high.

Think DHFL.

[carboy]

I have invested earlier in Post Office MIS scheme but since the last couple of years, they have started a new rule that you need to have a Post Office Savings account & the monthly interest will only be deposited in that account.

This makes it a pain & I have decided not to invest any more in PO-MIS.

Thinking of NSC instead. Any other interesting Fixed Deposits people are investing in these days.

[AltoLXI]

Originally Posted by carboy

I have invested earlier in Post Office MIS scheme but since the last couple of years, they have started a new rule that you need to have a Post Office Savings account & the monthly interest will only be deposited in that account.

This makes it a pain & I have decided not to invest any more in PO-MIS.

Why are you worried about that? Just open a savings account. I have one from the past 6 years.

I have a MIS account whose interest gets credited to the savings account. I also have an RD account and every month the MIS interest gets moved to RD as per standing instruction.

[carboy]

Originally Posted by AltoLXI

Just open a savings account.

I have no problems with opening a savings account. My problem is being forced to deposit the interest there. Earlier I could get it credited in a different account which is my regular spending account.

Originally Posted by AltoLXI

I have a MIS account whose interest gets credited to the savings account. I also have an RD account and every month the MIS interest gets moved to RD as per standing instruction.

I don't want that money in an RD either. I want a monthly interest scheme & not a cumulative deposit. The RD would convert a non-cumulative scheme into a cumulative scheme.

[Fx14]

Originally Posted by carboy

I have invested earlier in Post Office MIS scheme but since the last couple of years, they have started a new rule that you need to have a Post Office Savings account & the monthly interest will only be deposited in that account.

This makes it a pain & I have decided not to invest any more in PO-MIS.

Mind sharing your thoughts on why is it a pain?

Rather felt it is now more convenient.

Earlier, one had to physically go to the specific post office every month to withdraw the interest by filling up a withdrawal form for each MIS account separately to withdraw it in cash.

Now with the direct credit to the savings account, one can just transfer the amount by issuing a cheque to another account maintained in any other bank or else withdraw via any ATM by the debit card linked to the post office savings account.

This has done away with having to wait in lengthy queues at the post office every month.

[carboy]

Originally Posted by Fx14

Mind sharing your thoughts on why is it a pain?
This has done away with having to wait in lengthy queues at the post office every month.

Earlier, they allowed you to credit the monthly interest in any bank account of your choice. So I have never had to wait in line at the post office for anything. It just became part of the my spending money account.

@AltoLXI - even if your MIS interest got directly swiped into an RD, is the MIS scheme interest still shown in your AIS? Also how does RD interest how in your AIS? Does it get shown as the calculated interest every month or does it show only in the year the RD matures?

[Gansan]

I had to open a savings account five years ago when I opened a post office FD account with my wife. The monthly interest is credited there. I transfer it to my other bank accounts through net banking and never go to post office.

Edit : Now it is possible to even obtain an ATM card from Post Office Savings Bank if we wish.

[Fx14]

Originally Posted by carboy

Earlier, they allowed you to credit the monthly interest in any bank account of your choice. So I have never had to wait in line at the post office for anything. It just became part of the my spending money account.

So you are referring to the interim phase, when this was permissible. I went a bit further back in time with regards to the process followed.

However, I had opened the savings account and opted for the direct credits during the same phase you referred to simply because of the ease of reconciliation. You have been fortunate to have not faced any issues with the credit to another bank account. Happen to know of cases where the recipient bank credited the entry to a wrong account and the account holder had to literally dance between the PO and the bank to fetch the remittance reference number / day of remittance etc. And you will get the idea of how convenient that is.

If you invest in both MIS and FD schemes with the PO, then having a POSB account will also facilitate having all the PO scheme related Annual interest received details in one account.

@AltoLXI - even if your MIS interest got directly swiped into an RD, is the MIS scheme interest still shown in your AIS? Also how does RD interest how in your AIS? Does it get shown as the calculated interest every month or does it show only in the year the RD matures?

The way it works is a bit indirect - 1. The MIS interest gets credited to the Savings account on the scheduled day every month.
2. You need to sign up for a standing instruction to debit your savings account and transfer the amount to the RD preferably on the subsequent day or any later date every month.

From your previous posts observe that you expressed some concern with regard to the cumulative nature of RD, but at the same time considering NSC.

Note that an issue with both the RD and the NSC from your perspective is they are both cumulative in nature. In some cases, you may end up having to pay income tax on interest accrued that will be actually received only on maturity some years later. Better to consult your CA on the specifics before taking the plunge in such schemes.

[AltoLXI]

Originally Posted by carboy

@AltoLXI - even if your MIS interest got directly swiped into an RD, is the MIS scheme interest still shown in your AIS? Also how does RD interest how in your AIS? Does it get shown as the calculated interest every month or does it show only in the year the RD matures?

I have already maxed 80C contributions. So no point in investing under NSC. MIS interest is taxed . My CA calculates and pays the tax on that every year. For the RD, the total interest will be credited on maturity. So the tax will be paid on maturity.

[carboy]

Originally Posted by AltoLXI

MIS interest is taxed

Yes, I know. I have had MIS investments. My question is if the interest appears in the AIS if you also have a RD associated with it. When it was being credited to my non Post Office account & didn't get transferred to an RD, it showed up in my AIS. I am wondering if it goes from the account to RD, does it still show up in the AIS or will it only show up in the AIS at maturity of RD. That was my question.

Originally Posted by Fx14

From your previous posts observe that you expressed some concern with regard to the cumulative nature of RD, but at the same time considering NSC.

Note that an issue with both the RD and the NSC from your perspective is they are both cumulative in nature. In some cases, you may end up having to pay income tax on interest accrued that will be actually received only on maturity some years later

For cumulative deposits, my CA used to calculate accrued but not deposited interest & file it as part of returns.

But from the time the IT dept started publishing AIS, he has stopped doing it because he is worried that it will appear during redemption & they may demand an explanation as to why it was not fully paid in the redemption year.

This is the reason I try to avoid cumulative schemes. Hence I wanted to avoid an RD or NSC. However, it seems I may go for one of them.

[carboy]

I just checked the Post Office Recurring Deposit interest rate - it's just 6.2%. Any idea why recurring deposit interest rates are so low?

[DigitalOne]

Need advice on whether to
1. break old low interest rates FDs now and open new one's with higher interest rate (7.1% offered by ICICI)
or
2. Keep the closer/later (which one??) FDs till maturity, and break the later/closer FDs now.
or
3. keep everything till maturity and open new one's as they keep maturing.

Below are the older interest rates and the maturity dates in my wife's ICICI bank account: