Hi, I have some money just sitting in banks earning the 3%/3.5% - leaving aside some liquid funds, am considering putting the rest in bank FDs or liquid/short-term debt funds.
FDs are giving 6.4% currently (public banks).
My question is, right now should I put that money in FDs or in 1year liquid or low-duration debt funds. I’m currently a student so no income.
What minimum AUM should I look for?
you will get more in FDs than short term mutual funds ,
Ultra short funds are good.
Fd interest is low as well as taxable
Usually FD have a lock in period within which if you redeem you have to pay a certain percent as penalty. Where as most ultra short term funds have no exit loads. FD assures you a guaranteed rate of return where as for debt funds it will vary. If you are looking for safest mode of investment and you do not need money for a year, go for FD, else go for ultra short term debt funds.
If you are considering a longer tenure of investment, then you should consider the tax efficient investment, Investing in a short-term/ultra short term debt fund will be a wiser choice. After 3 years you will get indexation benefits where as in FD you have to pay tax as per your tax slab.
Hope it helps.