As Government of India decided to cut interest rates on all types of deposits including PPF, people have to lookout for other alternatives to get better interest rates. The investment strategy for many savers, especially senior citizens, would have to be tweaked owing to the 70-140 bps (100 bps make 1 per cent) reduction in interest rates on small-saving schemes. The NSC, PPF and SCSS, among other schemes, would earn a lot less now.
Here is the chart with Old & New Rate :-
Since debt is a crucial part of the portfolio for senior citizens, with low appetite for risk, asset allocation would play a major role. PPF, which is a fixed income option used for long-term savings can’t be a standalone wealth creation tool for young earners. Presence of equity investments in your portfolio is needed to beat inflation.
Avoid opting for riskier deposits, as your principal investment amount could be at risk. Any entity offering a rate higher than what is given by small-saving schemes and commercial banks should be thoroughly analysed for risks, and mostly avoided.
Source : Moneycontrol