An SBI mutual fund offering higher returns than bank FDs—without the risk! Discover this excellent option..

SBI Mutual Fund vs. Bank FD: Bank Fixed Deposits (FDs) are considered a premier avenue for safe investment. Depositing money in FDs has long been a habit for many of us. While the assurance of safe earnings offers peace of mind, considering the pace of inflation and the impact of taxes on actual returns often leaves one wondering, "Could I have earned slightly better returns?"

If you wish to earn higher returns on your hard-earned money than an FD offers—without taking significant risks—these select debt and hybrid schemes from SBI could prove to be game-changers for you. Let’s take a look at them.

Here are some low-risk SBI debt and hybrid schemes:

1. SBI Savings Fund

What it is: It is a money market fund.

Benefit: It is ideal for parking funds you wish to set aside for a period of 3 to 12 months. It invests in safe, short-term instruments like Treasury Bills and Commercial Papers, offering better liquidity and stable returns compared to FDs.

2. SBI Low Duration Fund

What it is: This fund primarily invests in short-duration corporate bonds.

Benefit: If your investment horizon is 1 to 2 years, this option can be very useful. It has the potential to deliver stable returns that are slightly higher than those of an FD.

3. SBI Banking & PSU Fund

What it is: This fund invests at least 80% of its corpus in high-rated (AAA) bonds issued by major banks, Public Sector Undertakings (PSUs), and financial institutions.

Benefit: It has an investment horizon of 2 to 3 years. Since it invests in high-credit-rated bonds, the risk is low, and the security is robust. 4. SBI Arbitrage Fund / Conservative Hybrid Fund

What it is: These funds are designed for investors who wish to avoid market volatility while seeking better returns.

Benefit: If you want to earn tax-efficient returns that outperform bank FDs without taking significant risks, considering Arbitrage or Conservative Hybrid funds could be a wise move.

Why are these options better than FDs?

Interest earned on bank FDs is fully taxable according to your income tax slab, whereas debt mutual funds can offer tax benefits based on indexation or the holding period. If you want to channel your short- to medium-term savings effectively, these SBI schemes can provide both stability and enhanced growth to your portfolio.

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