10 Best FD Alternatives in India 2024

Are you finding better investment options than FD in India? FD account or fixed deposit scheme is considered the best investment option among investors with little risk to get superior returns. However, in recent years most investors have started looking for FD alternatives. Because banks have started decreasing interest rates in FD accounts, and now it’s near 6.5%. This rate of return on investment can be little for investors. Therefore most of them look for alternatives to FD in India. So, investors can find the best investment options with little or no risk. In this article, we will talk about some mainstream investments and the best alternatives to fixed deposits.

Best FD Alternatives
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1. Liquid Funds

Liquid funds are the type of mutual funds that are invested for a short period into high-quality market securities. Here investors invest their money for 91 days, and there is no specific lock-in period like FD. So, if you do not want to put your money on for a long period, it’s better to invest in liquid funds. It will give you better returns in a short period. However, the rate of return varies based on the performance of the market. Some investors also consider these funds to put money as emergency funds as they can be liquidated in a short period.

2. Debt Mutual Funds

Debt mutual funds are the best FD alternatives for investors willing to diversify their portfolios. It’s a type of mutual fund where you get a fixed interest rate, just like an FD and government bonds. It’s the best investment option for those who want to get a fixed interest rate with little or no risk associated with the investment. Many investors prefer debt mutual funds because they are reliable, carry less risk, have a low entry barrier, and offer a good return rate. These funds are also very liquid, and here investors do not need to wait for years to get their money back.

3. Equity Funds

This mutual fund is managed by a fund manager that mainly invests your money into high-quality shares and stocks in growing companies. These equity funds can be categorised into two types such as active and passive equity funds. In an active equity fund, the fund manager does extensive research and carefully invests in the stocks for the highest return. In contrast, in passive equity funds, the fund manager creates a portfolio containing companies listed in market indexes like Nifty and Sensex. This option is good for long-term investment; however, it also gives a good return in a shorter time. Equity funds can also be categorised into large, mid, small, and micro-cap funds to get a better-targeted return on investment.

4. Fixed Maturity Plans

It is also a type of mutual fund and one of the best alternatives to fixed deposits. It is because these funds are getting invested into debt securities with a fixed maturity date. A fixed maturity fund’s date can vary from a few months to years. Therefore this fund is not so liquid but provides a better return to the investors. Fixed maturity plans also carry a low-risk level with the investment. If you think you can invest your money for at least six months, it can be an ideal investment option.

5. Government Bonds

It’s not only a top alternative to FD but also the safest investment option for Indian investors. The government issues government bonds, offering higher interest than FD. Because of these reasons, most investors and people prefer government bonds these days. It’s good to remember that government bonds have a long lock-in period. It is not the ideal investment option for those investors willing to invest their money for a short period. However, you can diversify your portfolio and maximise your chances of building wealth with a high-interest rate.

6. Ultra Short Term Funds

Ultra Short Term Funds are mutual funds that allow investors to invest their money for a short period. You can put your money in this investment option from six months to two years. This investment option is good for maintaining liquidity and keeping the portfolio diversified. Compared to standard mutual fund schemes, you can get a higher interest rate.

7. Corporate FD

Nowadays, corporations also offer FD schemes at higher rates than traditional banks. Most investors find corporate fixed deposit’s interest rate slightly better than any public or private bank. Hence, they consider investing in these FD accounts; also, these investments are flexible by nature. However, these investments are not as secure as banks’ FD schemes, and sometimes investors can have to face a deal-breaker situation. If you invest in these FD schemes, you should consider the well-known companies and corporates to get the safest deal.

8. Sovereign Gold Bonds

Sovereign Gold Bonds or SGBs are the top alternatives to FD schemes. It is because these bonds are very safe even when the economy is facing challenges like COVID-19. During COVID-19, many investors invested in this investment option to keep the losses minimum. It’s government security, and it is measured in the units of gold. It is a very easy investment option to own gold on paper and uses it to maximise wealth. Using this scheme, you can buy gold as a bond. And it allows you to benefit from the gold rate that has been increasing many times. You will earn the interest money on the bond’s maturity, and mainly RBI issues these bonds.

9. National Savings Certificate 

National Savings Certificate is the investment scheme launched by the post office. Under this scheme, investors can earn a 6.8% rate of interest and claim deduction under 80C of the IT Act, 1961. here you have to invest your money for at least five years, and this facility is available online and offline. If you have already invested in liquid funds or liquid investments. It can be a great investment scheme to diversify your portfolio and manage it.

10. Non Convertible Debentures

Non-convertible debentures are another FD alternative that offers higher returns with low risk. It mainly has two types such as secured and unsecured non-convertible debentures. In a secured NCD, in bankruptcy, the investors get their money first after selling the company’s assets. In unsecured NCD, the investor is not backed with the company asset; however, these debentures offer a high rate of return. You can know about these investment options by contacting a registered broker. However, before investing, it’s good to check out the company’s creditworthiness. So, your investment stays secure, and you get a good rate of return and money on maturity.


Fixed deposits are undoubtedly a secured investment option with a fixed rate of return. However, nowadays, investors are considering other mainstream investment options to get a better interest rate with little or no risk. In this article, we discovered the top FD alternatives: RBI bonds, liquid funds, national savings certificates, and more. Thus, we hope now you have clear information on the best alternatives of FD and are ready to diversify your portfolio.

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