We find many Fixed deposit lovers in India. Who are not ready to take any risk and happy with the fixed return. However, in a recent past, it is seen that return on fixed deposits are reducing and it is likely to reduce further. So, what fixed deposit lovers should do? Well, they can explore investment option called as Fixed Maturity Plan (FMP). A Fixed Maturity Plans (FMP) are like FDs only. It can generate fixed returns and has a lock-in period. One can also use Fixed Maturity Plans to save income tax.
A Fixed Maturity Plan is “closed-ended” debt based mutual funds. Closed-ended means it comes with pre-defined lock-in period. This lock-in period varies from 1 month to 3 years.
Fixed Maturity Plan do not invest anything in equity. It invests mainly in debt related investment instruments like –
FMPs are suitable for investors who love FD or in the other words for the investors with low-risk appetite.