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FMPs v/s Bank Deposits

Bank deposits offer guaranteed returns but FMPs are more tax effecient...

Should I invest in an FMP instead of a bank fixed deposit?
- Indrani Ghosh

Investing in FMP over fixed deposit will depend on your risk profile. Unlike fixed deposits that guarantee interest for the period of the deposit; FMPs do no such thing. FMPs are closed-end debt funds with varying tenures and can be redeemed only at the end of the term. Though their returns are not guaranteed like fixed deposits (FDs), but returns similar to fixed deposits. Where FMPS score over fixed deposits is the way they are subjected to tax.

This article was originally published on March 17, 2011.

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