Finance

How Have My Fixed Maturity Plans (FMPs) Fared In the Past One Year Compared To My Fixed Deposits (FDs)?

Posted Vinaya HS

In the past one year, my Fixed Maturity Plans (FMPs) have fared only slightly better than my Bank Fixed Deposits (FDs) of comparable tenure.

  • A 1-year FMP from IDFC achieved an APR of 10.05% (equal to an APY of 10.44% with quarterly compounding).

  • A 1-year FMP from SBI achieved an APR of 9.89% (equal to an APY of 10.26% with quarterly compounding).

  • A 1-year FD from HDFC Bank achieved an APR of 9.25% (equal to an APY of 9.58% with quarterly compounding).

Ignoring the complexities of investment timing and income tax, that’s less than a percentage point in difference! Have you seen anything different with your FMP and FD investments?

Note:

Here’s how you do the APR (simple interest) to APY (compound interest at a certain compounding interval) conversion.

If you’re totally lazy to the APR to APY conversion by hand, here’s a quick Android-application that I hacked. If you’re adventurous enough, you can download the .apk file and install it on your Android-phone as an unsigned application. Let me know if you run into any trouble — it should run fine on most Android environments.

5 thoughts on “How Have My Fixed Maturity Plans (FMPs) Fared In the Past One Year Compared To My Fixed Deposits (FDs)?”

  3. Hi Vinay,
    could you give us some tutotrials ,pros-cons on FMP’s .
    If possible if you can include some hands on example on indexation along with calculation ,it will be of v good help .

    Rgds,
    Nirjhar

  4. But isn’t the impact of income tax significant enough not to ignore? At this highest slab, the FD returns would be around 6%, while FMPs would still give returns higher than 7.5%.

  5. @Sam —

    Yeah. I didn’t want to complicate the illustration. FMPs are most certainly tax advantageous especially when their duration straddles multiple financial years.

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