With interest rates languishing and inflation remaining above 6%, traditional fixed deposits (FDs) and annuities are delivering post-tax returns that often fail to keep pace with rising costs. Most FDs today offer 6%-6.5% interest, which drops to around 4.5%-5% after applying a 30% marginal tax rate.

Global rate declines suggest that investors maturing in the next two to three years could face even lower returns, leaving many stuck in a below-inflation cycle for years.

In such a scenario, financial planners recommend beginning with a mix of floating-rate and arbitrage funds in the first year.

“This combination can deliver near 7% fixed returns across interest rate movements, with taxes charged only at withdrawal. Arbitrage funds get concessional LTCG/STCG tax rates, making them more tax

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