Invest in Term Deposits for 5 years...lose money 1st year, make money for 4 years

Strange solution ? ?

Well, here's the reasoning why you'll GAIN if you go for Term Deposits FOR A LONG TENURE OF 4-5 YEARS .

You see, the inflation has pushed up the interest rates.

Now, here's my prediction:

The inflation rate(11-12%) is currently higher than the interest rates for 5 years(10%). You are losing, right?
O.K. keep losing....But, my guess is
...the inflation rate, linked to crude oil prices + food crisis + other factors....

WILL START GOING DOWN WITHIN 1 YEAR......

Why?

Because within 1 year :

• The Crude Oil Crisis will blow over.
• Food crisis will go down due to the monsoons
• NDA will form the Government (I think within 6 months, for that matter)
• Political stability under NDA will ensure better economic decisions, though I like Dr. Manmohan Singh (poor guy, his hands were tied by political compulsions.....if freed from constraints, he could have by himself solved the inflationary mess we are in. I hope the country remembers he saved India from ruins !)

So, after 1 year, the Inflation Rate goes down......within 2 years, it might even touch 5%.

But your Bank's Interest Rate will be 10%.....

So, you GAIN BIG TIME........
10%-5% = 5% ASSURED GAIN for 3-4 years.

You can even wait 2 months more for the Interest Rates to go up to even 12% .