Options to park extra cash?

Timing the market is difficult. Why not start an SIP using smallcase?

Alternatively, start investing, and keep a GTT SL for 25%, you’ll have to update the GTT every week (I wish this a daily thing that could have been managed by Zerodha. What this does, is create a trailing stop for your investments.

Assuming you’re looking at stocks. Options are a different ball game.

What is SDL?

SDL is state development loans. Basically bonds issued by state governments of India.

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Are they Sovereign Loans? Most of the state government has taken huge loans… ? How are they rated? Can we buy them in Kite from Secondary market?

Yes they are rated sovereign and administered by RBI. So relatively safe instruments. Their yield is slightly better then Gsec
No they are not available for direct buying off the shelf for retail so can’t be bought on kite.

But there are multiple debt ETF MF scheme which are launched recently investing in these SDL. Most of them are offering 5-6 years term investing in SDL or combination of SDL & CPSE PSU bonds. Indicative yield for such products is around 6.4% and safety is relatively high.

It seems to be possible to do that but liquidity might be a problem -

Also, check this thread for their issuance calendar

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NCDs which are paying 8% to 12% interest monthly/annually. Higher the interest rates, higher the risk. Companies like DHFL has defaulted on their NCDs, previously.

Take a look at GoldenPI.


Sweep in FD gives you better returns that liquid funds and the amount is realised immediately. Equity will stablise in a month or maybe 3 months, you never know. So, you may switch from Sweep in FD whenever you feel like.

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Any penalty charges for pre-mature withdrawal in Sweep-in FDs?

To reduce the penalty of premature withdrawal, you will need to use low duration FD, which will give low returns… Kotak gives 3.5% savings bank interest, so that is not a bad option during such times, if you need the funds in short notice.

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Yes, in HDFC Bank you will get 1% less interest. So, for eg. if you have created an FD for 5 years and 2 days, you will get interest @5.5%. Convert it into Sweep in and withdraw and you will get interest @4.5%.

@Vij in HDFC Bank, the penalty remains same - 1%. So, if you take low duration weep in FD, say 1 year, the interest is 4.9%. After 1% penalty, you will get 3.9%.

And we have to pay tax on FD interest at slab rate. Assuming a 30% slab rate, the post-tax return on this sweep-in on premature withdrawal is just 3.1% . And even if we don’t withdraw, we have to pay tax on the accrued/received interest, so the post-tax return is 3.8% if we do not touch the FD for the entire 5 years 2 days.

At 3.5% SB interest rate, the interest on the first Rs.2.85L is tax-free, because up to Rs.10,000/- SB interest is exempt from tax. So parking Rs.3L or so in SB account makes eminent sense from this point.

So the answer to the question of how/where to park extra cash depends on a lot of factors, including the following:

  • Amount of money to park
  • Expected duration of parking
  • Applicable tax rate
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To the FD experts above :slight_smile:, is there any bank FD that provides a decent interest rate and doesn’t have any penalty charges for premature withdrawal in case of emergency (Hope I am not asking for too much :sweat_smile:)?

I want to park some funds in FD (total 5L) that are maturing next month, and you know the current SBI/ HDFC FD rates have gone south so much.

@ZeroIndian , @Vij - Then, IDFC first bank and Equitas give 6.5% interest on saving account. But make sure that you save only upto 5 L in one account - that’s the limit of RBI insurance on any Bank account.


Sounds too good to be true. No TDS. High liquidity.
But are they safe??

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Kotak bank says, for Less than 181 days(4.4% interest for 180 days) tenure FD, there is no premature withdrawal penalty. And for higher duration, penalty is 0.5% .

It appears there are some caveats. One needs to learn the payout cycle in detail. The payout frequency and associated discount has to be studied.

  1. For Fixed Deposits with tenure below 181 days, interest will be calculated at maturity as Simple Interest.
  2. Standalone Fixed Deposits of tenure 181 days and above linked to saving / current account will be treated as per the regular sweep deposit functionality and penal charge will be applicable as above.
  3. For ActivMoney (2 way sweep deposits) Regular Fixed Deposit rates will be applicable for all customers including Senior Citizen’s / Bank Staff
  4. Interest on Fixed Deposit can be paid for a period of less than a quarter (monthly interest payout) at the discounted interest rates as per RBI directives.

Edit: I have a feeling #1 above is exclusive and cannot be combined with #4. Which could mean no interest if withdrawn before 180 days.

Look into paytm bank’s offering. There are tied up with Indusind Bank, so the FD rates are quite high and theirs is a unique product, where the amount gets accumulated as per the time in the product and the fd interest rate for that time.

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Up to 5 lac you are safe by Govt provided insurance

Kotak mahindra is no good for FD . I still maintain the sb with kotak 30k balance & use it montly to pay power bill only.Kotak atm’s are functional & handy if you need cash.
as a senior with a wide bouqet of banks for Fd -
I recently closed Fd’s in kotak,central,BOB,Syndicate (canara) etc
I do have fd’s in Indusind (@7.5% senior rate booked last july) . In the same high risk category have Fd’s in LVB also (now DBS) .LVB is paying old high fd interest in time . But new rates are low .I wont renew Fd with LVB come july.
Opened FD a/c in new risky players Equitas, DCB . will shortly open in IDFC , Bandhan, RBL etc (never more than 5 lakhs FD /per bank)
shall close accounts completely in central,BOB,Canara,OBC etc.
South based private banks are still good (FD interest higher than sbi but less than Indusind) TMB,CUB,KVB,SIB,Federal .
In god we trust . but trust RBI’s 5 lakh guatantee more ! :smiley:


Yes you will keep 5 lac max per bank but with these private banks …be careful about their terms and conditions and fine print