Stagger FD investments to catch peak rates
Business Standard|May 23, 2024
While some portion of your money should go into longer-tenure FDs offering higher rates, diversifying across maturities is essential as well
KARTHIK JEROME

State Bank of India (SBI) recently hiked interest rates on its retail term deposits by 25-75 basis points for tenures of up to one year. With interest rates at or very close to the peak, this is a good time for fixed deposit (FD) investors to lock into current rates.

Two factors may have caused SBI to hike its FD rates.

"Credit demand has been strong, pushing the creditdeposit ratio of banks to elevated levels. Moreover, the Reserve Bank of India (RBI) has kept liquidity tight to rein in inflation, so banks are raising money via deposits to have liquidity on their balance sheets," says Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors.

Capitalise on current rates

To capitalise on current rates, go for FDs of longer tenures.

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