Investors looking for higher returns post the sharp cut of interest rates in small savings products and bank deposits by up to 140 basis points could turn to banking and PSU debt funds. These funds could give investors 6.5-7.5%, thereby helping them earn 50-150 basis points higher than small savings products. For those in the high tax bracket, if they hold these funds for more than three years, these products will also get indexation benefits, which will significantly improve the post-tax returns.
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