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?
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.