Modi & 95 per cent Indians love FDs. But there's a better alternative

Just because it's popular doesn't mean it's the best. The same can be said of fixed deposits (FDs), an investment option that has maintained its popularity among multiple generations. As per the last SEBI survey in 2017, an overwhelming 95 per cent of Indians swore by FDs. Heck, even our prime minister, Narendra Modi, is an FD fanatic, holding 90 per cent of his assets there, according to the Election Commission of India. The rationale is that FDs are safe and offer guaranteed returns. But if you dig deep, you'd find that they flatter to deceive. Why? Their performance, for one, is underwhelming. Currently, the one-year SBI FD is delivering 6.25 per cent; in contrast, the average returns of debt funds, a similar risk-averse investment option, range from 6.1 to 7.56 per cent across various categories. Since past returns don't guarantee future performance, we looked at the debt funds' yield-to-maturity (YTM). (YTM indicates the return if the fund is held until maturity.) Here, too, debt funds shine. For instance, short-duration f