Debt returns take a knock

It may be a good time to either increase allocation to fixed income or move money to equities

For people close to retirement, it is bad news. For the first time in 30 years, the interest rate on the Public Provident Fund (PPF) has gone below eight per cent (7.9 per cent now). Recently, the Employees’ Provident Fund Organisation (EPFO) also slashed its rate by 15 basis points (bps), to 8.65 per cent. State Bank of India’s fixed deposit (FD) for five years or more now fetches a meagre 6.25 per cent interest annually. With many people depending heavily on fixed income instruments to save for retirement, declining interest rates mean they need to fine-tune their strategies.

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