Falling FD Rates: Time to Reconsider Your Fixed Income Strategy
Remember when Fixed Deposits (FDs) were the go-to choice for safe returns? That’s changing.
With the RBI cutting its key interest rate from 6.25% to 6%, banks are likely to lower FD rates too. So, what does this mean for you?
Let’s say your FD earns around 6% currently. Sounds decent—until you factor in inflation (which is also around 5–6%) and taxes. Suddenly, your ‘safe’ return doesn’t feel so rewarding, especially if you’re in a higher tax bracket.
But don’t worry — you’ve got options.
Here are some smart alternatives:
Debt Mutual Funds: Handled by experts, and can give better post-tax returns over time.
RBI Floating Rate Bonds: Safe, government-backed, and returns go up if interest rates rise.
Corporate FDs: Offer higher returns than banks — just stick to trusted companies.
SWPs from Debt Funds: Lets you withdraw money regularly, like an interest paying FD with better tax perks.
At Hum Fauji Initiatives, we introduced the Debt Opportunity Portfolio (DOP) to take advantage of declining interest rates. DOP-1, launched in February 2023, delivered 9% annual returns, while DOP-2, launched in June 2024, is already on track for 11% returns. These results are not just projections; they’re actual returns that our investors are seeing. With careful planning and strategic positioning, we’ve been able to help our clients earn more, even in a challenging market.
And these returns are only getting better as interest rates are going down!
Although subscriptions for DOPs are now closed, our strategic foresight continues to create new opportunities for our clients.
As our CEO always says, “True financial planning is about designing timeless strategies that work—regardless of market conditions.” We’re committed to helping you make your money work smarter, not harder.
The world of saving is shifting. If your FD isn’t doing enough for your money, maybe it’s time to mix things up a little.
(Contributed by Prerna Pattanayak, Relationship Manager, Team Sukhoi, Hum FaujI Initiatives)
The Ultimate 12-Month Game Plan for Financial Wins
You don’t have to wait for January to take control of your money. Whether it’s April, August, or December — the best time to start is now. Here’s a simple month-by-month plan tailored for Indian households to build better money habits, one step at a time. And your Month1 starts now!
- Month 1 – Know your numbers. List your savings, loans, investments (FDs, EPF, gold), and calculate your net worth.
- Month 2 – Track where your money goes. Use simple budgeting apps to cut wasteful expenses.
- Month 3 – Build an emergency fund. Start small with a liquid mutual fund or a high-interest savings account.
- Month 4 – Focus on debt. Use the snowball or avalanche method to clear EMIs or credit card dues.
- Month 5 – Automate your savings—start a SIP, set up a PPF, or open a recurring deposit.
- Month 6 – Check your credit health. Review your CIBIL score and fix any mistakes.
- Month 7 – Review your insurance. Make sure your life, health, and vehicle covers are up-to-date.
- Month 8 – Look for ways to grow your income—freelancing, side projects, or negotiating better pay.
- Month 9 – Plan for retirement. Increase contributions to EPF, PPF, or NPS.
- Month 10 – Learn how investments work—understand mutual funds, stocks, and ELSS.
- Month 11 – Prepare for taxes. Use deductions under 80C, 80D and others.
- Month 12 – Reflect. Check what worked, what didn’t, and reset your financial goals.
Success isn’t about when you start — it’s about staying committed. Each month is a new chance to grow your wealth and take control of your financial future. The time to act is now.
(Contributed by Avantika Agarwal, Financial Planner, Team Sukhoi, Hum FaujI Initiatives)
US Fed vs RBI: How Their Moves Impact Your SIPs
Because what happens in Washington doesn’t stay in Washington…
You might think what the US Federal Reserve does is far away from your monthly SIP in India — but actually, it can affect your returns more than you think!
So, What’s Happening?
- The US Fed is planning to cut interest rates later this year to support its slowing economy.
- In response, India’s RBI also cut rates recently (in April 2025) to boost our economy, especially after the US imposed new tariffs (extra import taxes) on Indian goods.
So… what does this mean for your SIP?
- Equity Mutual Funds: Lower rates help businesses borrow cheaper, possibly boosting profits and stock prices. This may be good news for your equity markets and mutual funds.
- Debt Funds: These funds usually perform better when interest rates fall, especially those with longer-term bonds.
- Foreign Funds: If you invest in global or US-based mutual funds, the rupee–dollar value can affect your returns. A stronger rupee might lower your gains from foreign investments.
What Should You Do?
- Stay calm, keep investing — SIPs are built for the long haul.
- Don’t panic when markets wobble — that’s when SIPs quietly do their best work.
- Mix it up — diversify your portfolio.
- Check with your advisor, if you are unsure — it’s okay to ask for help.
Bottom Line: Big moves by central banks like the US Fed and RBI can cause short-term noise. But if you stick to your SIPs and stay patient, you’re doing it right.
(Contributed by Aman Goyal, Relationship Manager, Team Vikrant, Hum Fauji Initiatives)
What did our clients ask us in the last 7 days?
Question: My father wants to donate a large sum to a charitable hospital. However, he first wants to gift this amount to me and then have the donation made by me in my name. Can he gift the money to me without any tax implications to either party? Can I claim tax exemption if the donation to the hospital qualifies for an exemption?
Our Reply: It’s great that your father wants to support a charitable hospital, a great cause. The process of gifting the funds to you for the donation is straightforward.
As per Section 56(2)(x) of the Income Tax Act, 1961, any gift from a relative, including a parent, is completely tax-free. So, your father can gift the amount to you without any tax implications for either of you.
Now, for the donation itself, if the hospital is registered under Section 80G, you’re eligible for tax deductions on the amount donated. Depending on the hospital’s tax registration status, you can claim either a 50% or 100% deduction on the donation.
A few things to keep in mind:
- Donations over ₹2,000 must be made through non-cash modes (like cheque, bank transfer, or digital payments) to qualify for the deduction.
- This tax benefit is available only under the old tax regime. If new tax regime is beneficial to you even after counting this donation, it may not save you any tax.
This process allows you to make a generous contribution to the hospital while benefiting from the tax advantages, as applicable.
(Contributed by Team Sukhoi, Hum Fauji Initiatives)
Always consult a trusted financial advisor like Hum Fauji Initiatives for guidance to ensure that your donation is both impactful and tax-efficient!
