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I am a Software Engineer by profession and passion. I am facing problems with chosing how shall I invest my money.
I have worked for 3 years now, and have around 40 lacs INR total earnings which I have kept in my bank account.

For the first two years, I didn't even know about Fixed Deposit, and just kept money in normal Savings account.

I feel very bad about it, but I think a lot of engineers might not be aware of this. My family also just relies on doing FD that gets you around 7% interest pa.

My friends constantly talk me into Mutual Funds and that it also has 1 Lac tax rebate on interest earned from it.
One of my friends also told me to chose MFs that are equivalent to FD, as they are very safe and get you tax rebate of 1 Lac as well.

With this in mind, here are few questions to get started with -

  • Do a lot of people rely on just FD?
  • Is that "Mutual Fund equivalent to FD" really a better idea than bank FD? I mean 1 lac tax rebate surely makes it sound better.
  • I know that banks aren't safe either if they shut down, they only pay you 1 lac INR back. Shall I open 20 bank accounts and keep 2 lacs INR in each of them to mitigate risk? I know this diminshes risk, but having 20 bank accounts surely doesn't look like a cleaner, maintainable way.
  • What exactly shall I do with my money? My parents feel to buy a house, but the place where I live, prices have already grown a lot and I feel buying a house should be done in a place where growth is meant to happen in next 10 years.

I have been researching a lot about financial investments, MF, trading (candlesticks, analyzing the charts).
I realized that I really don't enjoy spending time in finding the list of blogs/resources to learn from. I also have trust issues in going to a random financial advisor. Its tough to keep a job, spend time with your family and friends and then also search the internet for quality resources.

I want to take a decision now what to do with the 40 lacs INR - keep it in FDs into 20 banks V/S invest in MF and trading?

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Well this is not financial advice.

I can provide you my prespective, the FD on indian banks is used to loan out to other people, but due to current NPA problem people are slowling loosing confidence on banking system, your question also came after facing the same fact.

You should move your savings to liquid funds as they are very liquid which means the money which is given out as loan is for very short term, like from 90-180 days.

Plus the money is given out to very sound insitutions like government and companies which needs working capital loan or payment bills. well all that is complicated but the fact is those items are very liquid as compared to FD.

The interest will be similar to FD,There is no hard limit of time priod for which you have to keep the money in you can take it out anytime.

so search for a good liquid fund and keep your money there rather than in a FD or savings account in a bank.

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TL;DR:

No; it's not prudent resolution.


Don't put all your eggs in one basket

You should not put all your efforts and resources into a single stream of income; you should diversify so as to reduce the risk of potentially losing everything.

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  • My answer needs way too more details. Also, its not just about safety. Please read the statement carefully - it has way too many questions. I know already what you have said.
    – maverick
    Nov 3 '19 at 6:15

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