1. To avoid uncertainty because of fluctuating interest rates, build a ladder of fixed deposits with different tenures from 1 year to 10 years.
2. When the 1-year deposit matures, reinvest the maturity proceeds in the longest tenure of your ladder, which could enable interest rates to balance out over a period of time.
3. You need to buy an even amount of deposits and the goal of this strategy is to ensure that they mature yearly, providing you with a steady income, or allow you to reinvest the proceeds for the longest tenure to continue with your ladder.
4. You can even have two ladders - one of 1-5 years and another of 6-10 years - depending on your income needs.
5. National Savings Certificates (NSCs) can also be used to create an income ladder, by buying certificates every month or quarter for appropriate denominations, which on maturity will act as a steady income stream.
6. Corporate Fixed Deposits and Non-convertible Debentures (NCDs) do offer higher return than traditional Fixed Deposits, but they carry much higher risk of default as well as liquidity.
7. However, to get more out of fixed income, you will need to move a bit higher up the risk ladder into debt funds, which are market-driven, but are more liquid and tax-efficient.
8. Dynamic bond funds and Fixed Monthly Plans (FMPs) provide a good alternative to traditional instruments as they can offer decent capital appreciation, even though the returns are not guaranteed at all times.
2. When the 1-year deposit matures, reinvest the maturity proceeds in the longest tenure of your ladder, which could enable interest rates to balance out over a period of time.
3. You need to buy an even amount of deposits and the goal of this strategy is to ensure that they mature yearly, providing you with a steady income, or allow you to reinvest the proceeds for the longest tenure to continue with your ladder.
4. You can even have two ladders - one of 1-5 years and another of 6-10 years - depending on your income needs.
5. National Savings Certificates (NSCs) can also be used to create an income ladder, by buying certificates every month or quarter for appropriate denominations, which on maturity will act as a steady income stream.
6. Corporate Fixed Deposits and Non-convertible Debentures (NCDs) do offer higher return than traditional Fixed Deposits, but they carry much higher risk of default as well as liquidity.
7. However, to get more out of fixed income, you will need to move a bit higher up the risk ladder into debt funds, which are market-driven, but are more liquid and tax-efficient.
8. Dynamic bond funds and Fixed Monthly Plans (FMPs) provide a good alternative to traditional instruments as they can offer decent capital appreciation, even though the returns are not guaranteed at all times.