Home buyers may be unhappy with a flurry of rate hikes is the Reserve Bank of India (RBI). But there are others who are enthusiastic - a conservative fixed income investors. The dominant fixed deposit (FD), the rates offered by banks are the highest in recent times. In the turbulent stock market today and the price of gold skyrocketing, the temptation ensured a return to good FD is fathomable.

Some banks offer as much as 10 % on a loan period of one to two years. Most banks offer around 9.5 % for three to five year tenure. You must choose the duration, depending on your cash flow needs, risk tolerance and financial objectives. Those who have long-term goals such as saving for their children's education or marriage can lock their money in the bank framework decisions, which gives the best performance over a long career. If you need money in the following year, select property deposit of one year.

Risk tolerance of the investor is an important factor that determines its exposure to various instruments, ranging from fixed income to equity volatility. A person with moderate risk appetite can reduce its equity exposure now and invest in profitable banking framework decisions. He still maintains equity investments in the hope that they will rebound in the coming months and return manifold. The elderly, and investors more cautious and prefer to avoid the troubles have much of their money invested in the framework decisions.

Moreover, inflation has compounded the woes of the small investors. The food inflation, coupled with rising fuel prices have eaten a large proportion of disposable income. Technically, the return of FD-time of high inflation (inflation-adjusted returns) are not as attractive for aggressive investors. However, the probability of rate hikes, the Bank FDS is an interesting option to explore.

Fixed income products, such as FD bank that are held for long periods carry a formidable reinvestment risk. The risk of crop uncertainty about interest rates in the future. What can an investor when the FD matures and discovers that the rates currently offered for similar products is much lower?

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You can systematically invest in fixed income products with different maturities. This technique is called laddering. Not only minimizes the risk of reinvestment period, but also allows the investor cash flows at regular intervals. Parking money in FD, with a full fixed expiration date is not recommended. If interest rates rise, you can lock the current FD and the interest rate can not be higher. Conversely, if prices fall, you will be happy to lock your money in FD a good pace.

Since it is impossible to determine what would be the interest rate after say 2-3 years, the timing is a safe and reasonable to invest in framework decisions.
Banks offer a higher interest rate for periods of one to two years. Investors with low risk tolerance is the return of the insured an attractive fixed deposit in the current market. Long-term deposits is at risk - the rate applicable at the time of maturity and for a renewal may be lower than current rates on offer.

Source: [ET]