I have a fixed deposit that will mature in the next month. I don’t need the money and want to invest in a more tax efficient manner. In the current scenario, should I go for an FMP or a debt fund like SBI Dynamic Bond? -Barun Basak
An FMP or a debt fund will make sense for anyone in the higher tax brackets. However, if you don’t come in any tax bracket, a fixed deposit is a good option because your earnings will be tax-free. If you pay tax and have a defined timeframe, invest in an FMP. But if you want your money to be on call, go for the dynamic bond fund. We are hopeful of a rate cut in the next year or so, and dynamic bond funds are key beneficiaries of them.