Home / Money / Q&a /  I've been investing in FDs but returns are low. Are debentures a better option?
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I am a 70-year old banker, drawing a monthly pension of around 40,000. I have got fixed deposit (FD) proceeds of 50 lakh. Please suggest where to park to get returns above inflation. I have been investing in FDs from banks for some time now but the returns are very less. Are debentures a better option compared to FDs? Are they safe or is it wiser to stick with FDs?

—Name withheld on request

The returns from debt investment and fixed deposits have been low across the last couple of years and this is a common concern for many senior citizens. Considering the overall scenario your investments need to generate returns higher than inflation and your query regarding the same is an important one. There are many senior citizens who at the time of their retirement had used the bucketing strategy to invest their retirement corpus across bank, debt, hybrid mutual funds and equity to generate overall portfolio returns that beat inflation and grow at a better rate along with taking care of their monthly expenses.

Usually, the risk appetite at your age reduces and hence the overall investment should have limited risk. However, you do have a monthly pension of 40,000 which would be helping you to take care of monthly expenses to a certain extent. Since you have been a banker, I presume you would have already used investment avenues like Senior Citizen Savings Scheme & Pradhan Mantri Vaya Vandana Yojana (PMVVY). If by any chance you have not invested in any of these so far you can consider them.

If you have already utilized these investment options then you may consider a blend of debt and hybrid mutual funds to invest this amount. In hybrid funds, you can invest in conservative hybrid funds which are predominantly debt-oriented balanced funds or balanced advantage funds where the allocation in equity may be marginally higher compared to the conservative fund. In debt funds, you may invest in banking & PSU debt funds and corporate bond funds. Using these avenues you will be able to generate returns better than fixed deposits with some element of risk. Since the investment across different funds should be based on your withdrawal needs and risk appetite you may consult with an advisor to work on a proper plan before investing.

Answer by Harshad Chetanwala, founder, Have personal finance queries? Send an email to

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