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Originally Posted by rkg Kindly annualize the way your are thinking and compare from same site what was the actual annual yield of the same fund.do youfind any difference?
as far as i know all the returns are PA only. if it is 3.59% per month it amounts to 43.08% PA. then it is better than any investment.
further check the same site now the max yield during the last one month is 2.6% as on 11th feb. it was 3.59% as on 8 th feb. do you think in two days it will change so much ( from 3.59% to2.6%, esp when these two days being holidays?)
i have clearly mentioned the source as valueresearchonline
bank FD for year as of now yields 8.5%. for the last one year (your reference period ) bank FD's yield was around 9.5%
current SBI rate for 15-45 days FD is 4.75%
46 -90 days it is 5.25%
so in theory a person can make an FD for 46 days for 5.25%.his/her returns willbe more than debit funds.
Bond rates fluctuate based on CRR, bank rate, repo rate etc but not based on retail consumer lending rates which you are referring. RBI has not chnaged any of these rates CRR< bank rate, repo rate.
read your post again- your equating US fed rate cut with indian bank rate cut for consumer's. equivalent would be RBI Bank rate cut. |
Well, the rate of return that you saw are indeed one-month returns. You gotta remember markets are not perfect, they are volatile and move unpredictably. A 3%+ return in a month does not mean that it will go on for the rest of the 11 months in the year and you'll have a 36% return annually. Similarly, the equity markets returned a negative 15% over the last month or so. The monthly return has been -15%, and the annualized equivalent is -180% (yes, you read it right). But is it possible? No!!
As I have mentioned in one of my posts earlier in the thread, some bond funds have made a killing in the past month or so due to the volatility. They might have made a killing in the recent times, but they would give up some of their gains and get back to the norm, which is anything between 6-9% annually.
You gotta make an apples-to-apples comparison brother. You would not get a specified return on a one-year Bank FD, if you make a premature withdrawl. If you kept your money locked-in for a full 365-day period, yes, you would make a decent 8-9.5%. But our case in very very different.
We are talking about a float of 20-25 days at max. What is the interest rate Banks give on a FD for this term? You gave the answer yourself - 4.75%. Oh! your theory is a little flawed as well. The returns that the Bank FD is paying you is measured in percentage points per annum, and not monthly. So, in effect, if you invested Rs.1,00,000 in a 45-day Bank FD @ 4.75%, the bank would pay you Rs.585 as interest, which is calculated as follows:
Rs.1,00,000 * 4.75% * 45/365 = Rs.585.62
That equates to a yield of 0.40% per month or an annualized yield of 4.75%. Comparable debt/liquid funds give a yield of anything between 0.50% - 0.75% per month which equates to an annualized yield of 6%-9% per annum.
Other than that, tell me one thing, who in their right mind would pay you interest for 365 days when you only keep your money with them for 20 days a month?
I just made a simple reference because I didn't want to hijack the topic any more and go way beyond what we originally started with. I know the basis for variations in bond prices, but it doesn't seem to be relevant here. We can start another thread on that and discuss the same.
@Mods: A suggestion from my side. Can we shift this discussion to a new thread which starts from DCEite's original post (#57) which got this thing started? We can name it as "How to make efficient use of the credit cards held by you", or something like that. We have already deviated enough from the original purpose of the thread which was to share any issues being faced by the consumers with the credit card companies.