Ladder your fixed deposits to avoid the risk of reinvestment: Experts

Debt fund investors should keep the bulk of their investments in shorter-duration funds, 10-20% in longer-duration ones

On August 5, the Reserve Bank of India (RBI) hiked the benchmark repo rate by 50 basis points (bps). It now stands at 5.4 per cent. Altogether, the RBI has hiked the repo rate by 140 bps in this cycle. Most economists expect the repo rate to rise to 5.75-6 per cent by the end of this calendar year. Fixed deposit (FD) and debt mutual fund (MF) investors need to calibrate their strategies for a rising-rate scenario.

FD rates rising with a lag
 

While FD rates have risen, the pace has been slow.

“The transmission of the increase in repo rate to