MUMBAI: UTVi's Vikram Oza spoke with PV Subramanyam on whether Fixed Maturity Plans is a good investment option.

The money that we have put in fixed maturity plans, say a few months ago, are now going to come up for redemption so what do the investors do with the money?

Subra: With lower interest rates FMPs aren't attractive.

So at this point of time FMPs don’t make that much sense. So FMPs do work like light fixed deposits don’t they?

Subra: Well FMPs are tax efficient, when interest rates are heading backwards. Some can be with high rates. So for senior citizens do find these rates good enough. The benefit of maturity plans is that you get a fixed amount by the end of the maturity period so that works for your benefit. Today you have another advantage with FMPs is that they can be listed on the stock exchange. So if interest rates fall these FMPs go up. A listed FMP can be redeemed before the due date.

A lot of people will have this fear that the money that they have put in the fixed maturity plan because of the way the markets are they may not have the money to get there.

Subra: So the options is to look at the FMP papers where you have invested. so if you see a lot of real estate paper and you see the real estate agency is not doing well then there is some fear. FMP yields may fall slightly

There were investments available on tax investments plan that when we are closing the fixed maturity plans then the investments of the short term goes away as well isn’t it.

Subra: Well today weather you will get FMPs of that size duration is doubtful. See every body is expecting the rates to come down. So the rates that are there may not be of high rates 

This brings us to a very important point most of them are looking at the avenues and the short term investments see what the plan gives you  always look at a fixed income at the end, so if your not looking at it then what is the other reason.

Subra: The fact is that the interest rates will be decided only post elections. So right now taking a retail interest call is not very sensible. If he gets a good deposit of say 7-7.5% then he should just take it.

So it's better to be safe than sorry

Subra: Yes, wait for the new government to be placed or if you’re happy with the interest then go ahead. Invest in FDs of well rated companies.

Lot of uncertainty in the markets is going to last so go with a fixed deposit plan ahead.