Last Updated on October 14, 2022 by hassan abbas
When it comes to a fixed deposit, it is an excellent investment choice to help you preserve and maximise your savings with a higher interest rate. With the help of a fixed deposit investment, you can quickly get a uniform rate of interest that is more reliable than most mutual funds or equity investment options.
When you are an individual or business, you will not be denied a fixed deposit investment; when you are an Indian, you are automatically eligible for it. However, the interest rate you get will be a bit higher when you are a senior citizen than an average individual.
When you are a person who wants a risk-free investment, it will provide you with higher returns, then choosing a fixed deposit investment is the best option. And, when you are a senior citizen who wants to enjoy your retirement, then a fixed deposit is still the best choice.
In India, both the NBFCs and financial institutions tend to offer fixed deposit investment options for individuals and businesses to save their hard-earned money. A fixed deposit is an investment where you will be able to invest a lump sum for a fixed tenure and interest rate to attain an assured return at maturity.
A fixed deposit is one of the highest interests, providing investment options to help you get a higher corpus than invested. An FD offers assured returns as it does not depend upon the market fluctuations for its returns. You can also get a fixed deposit investment both online and offline, depending upon your financial requirement.
A fixed deposit has a flexible tenure option that ranges from 7 days to 10 years. You can also select depending on your financial goals and requirements. However, depending on the amount you invest and the tenure you choose, your interest rate will also vary.
Before investing in a fixed deposit, you should understand it better and start your investment to get better payouts.
Assured returns: One of the main advantages of having a fixed deposit account is that it will provide you guaranteed returns on the investment. There is no-risk involved in a fixed deposit compared to other investments like mutual funds, debt funds, etc. Therefore, no risk will be a fixed rate of interest paid on the investment amount.
Easy account opening: It is extremely easy and quick to open a fixed deposit account. And this can also be done online in a matter of minutes. However, you can open a fixed deposit account online in most of the major financial institutions across the country with minimum documentation.
Encourages saving: When you are opening a fixed deposit account, it encourages the habit of putting aside money for the rainy days of life. However, this also teaches the discipline of saving money for the long term.
Higher rate of interest: A fixed deposit account tends to offer a higher interest rate when it is compared to savings accounts or any other types of term deposit accounts like recurring deposits, etc.
Flexibility: It also gives the account holder the flexibility to choose the amount of money you want to invest and helps in deciding on the tenure range. However, you can also make investments for a minimum period of 7 days and a maximum period of 10 years.
Multiple accounts: You can also hold multiple fixed deposit accounts at the same time without any hassle. For instance, you can easily hold 2 or 3 FD accounts in the same financial institution. You can also hold a fixed deposit account across different financial institutions.
Tax benefit: When it comes to tax saver fixed deposits, it offers tax benefit under Section 80C of the Income Tax Act. You can also invest up to Rs.1 50,000 and claim tax exemption for the same. However, the most tax saver FDs have a lock-in period of 5 years.
Helps beat risk: When opening a fixed deposit account, it is the best financial instrument to beat risks that may arise from investing in other high-risk financial instruments such as stocks, mutual funds, etc. However, this also helps you to manage financial risk on a long-term basis.
Avail loan on FD: You can easily avail of a loan in times of financial crisis on the FD amount. You can also take up to 90% of the FD account amount as a loan. However, the account holder will still earn interest on the remaining amount left in the account.
Minimal to no-risk investment: When it comes to a fixed deposit account, they are minimal to no-risk investments. You need not spend sleepless nights or also worry about losing money in this type of investment.
Highly liquid investments: A fixed deposit offers the customer the advantage of liquidity. Suppose, in case, there is a cash crunch or any other type of financial emergency. In that case, you can permanently close the FD or make an overdraft with the same.
Interest can be paid quarterly: You can easily supplement one’s income and earn a fixed interest on a monthly, quarterly or half-yearly basis. This does come in handy for those who do not have a regular source of income like pensioners etc.