Myra & Co., is a complete financial solutions provider and we place our client's objectives foremost. As an investment manager we understand that in order to build a comprehensive portfolio, it is imperative that a certain portion be reserved for debt instruments in order to strike a balance between risk and return.
- We help you select the appropriate debt products, keeping in mind your financial goals, liquidity and tax planning requirements.
- Last but not the least; we take all the hassles of investing in bonds on our client's behalf including the wearisome efforts involved in extensive paperwork and documentation.
All fixed deposits, debentures, bonds are categorized as debt instruments where the investment earns a fixed amount as interest income at a rate of interest, referred to as Coupon Rate.
A lot of investors feel secure to invest in Deposits for one simple reason - The Capital is protected and there is an interest income, which is generally assured and known at the time of investment.
But this investment approach fails to factor-in the effects of inflation which is usually overlooked. If the rate of interest earned on a fixed interest income instrument, i.e., Coupon Rate is lower than the rate of inflation, the investment will yield negative returns.
A brief illustration will explain this.
Suppose you invest Rs. 100 in a scheme, which doubles your money in 10 years (interest rate 7.2%), you will receive Rs. 200 at maturity. At the end of 10 years you will be happy that you not only got your Rs. 100 investment intact, but also got Rs. 100 extra by way of return. All in all a good investment decision, isn't it? But if the average inflation during this period is say 8% then you would have actually lost money. Rs. 200 that you now have has even lesser buying power than Rs. 100 you had 10 years ago. The sad part about this is that you will not know it but will just have a vague feeling of not being able to keep up with the expenses.
With this illustration, we do not advocate that one should not invest in Fixed Deposits at all. Instead, we merely intend to make investors recognize the perils of the underlying assumption which says that - Fixed Deposits are absolutely safe and it is the only investment of choice for the risk-averse individuals.
