Corporate deposits

There are many high quality corporate deposits that you could consider, which fetch you a decent interest rate. For example, you can get an interest rate of as high as 8.75 per cent, in the AAA rated deposits of Mahindra Finance.

KTDFC, a government of Kerala enterprise offers an interest rate of 8.5 per cent and the deposits are backed by the government of Kerala. PNB Housing Finance and Bajaj Finance offer interest rates up to 8.45 to 8.50 per cent.

These are AAA rated deposits, which are relatively safe.

PPF

The interest rate on PPF has now been hiked to offer you an interest rate of 8 per cent. This is one investment that offers you a dual benefit of tax free interest and also Sec 80C benefits.

So, if you invest up to Rs 1.5 lakhs per year, you qualify for deduction under Sec 80C of the Income Tax Act. The deposits are also safe. The other small saving deposits offered are also attractive including the NSC and Kissan Vikas Patra.

FMPs and Ultra Short Term Funds

Fixed Monthly Plans (FMPs) and Ultra Short Term Funds are also looking attractive for investment. This is because they tend to offer superior returns as interest rates trend higher.

From a 1-2 year perspective these are not bad bets, as government yields have only trended higher.

Gold

Gold too may not be a bad bet given the fact that the rupee has been fast depreciating. In fact, a sharp drop in the rupee has made gold even more costlier. As geo political tensions rise, it is a good idea to diversify and hold some amounts into gold.

At Rs 31,000 gold for 22 karats, may have some upward momentum, as there is no telling where the rupee is headed. So, buying the dips as far as gold is concerned is not a bad idea at all. However, it is important to note that as such gold has not given extraordinary returns, and the idea of holding gold is to diversify your portfolio.