If you have surplus funds and you have parked the same in your bank accounts as idle money, you should be aware that the return on those savings is less. You can invest your idle money in mutual funds, shares, or even in fixed deposits. When you are investing in shares or mutual funds, there is a risk associated with the investment. But fixed deposits are a highly regulated form of investment and come with less risk.
If you have surplus funds, you can use those funds in buying gold or other assets like systematic investment plans or mutual funds. It offers a higher return on the investments made. But this is not the case when you lock your money in fixed deposits for a fixed period. It is considered the best and secured option for all who are looking for safer ways to park their funds and expecting a guaranteed return on the same.
All the financial institutions, including banks and NBFCs, operate under strict rules and regulations as set by the Reserve Bank of India. The banking sector in India is the safest place, and all the investors have been given full assurance that money invested here in different schemes is safe.
All the investors will get insurance of Rs. 1 lakh from the banks and financial institutions if they are investing in fixed deposits. Instead of making one huge FD, you can split the fund by making small FDs to avail of the benefit of getting Rs 1 Lakh insurance on every fixed deposit you create either in your name or in your spouse’s name, or joint FDs.
It is the best option for senior citizens, as they are retired and do not have regular monthly income sources. A senior citizen must invest in fixed deposits and earn a monthly interest income to meet their daily expenses with ease. When senior citizens put their money in fixed deposits, they are even allowed to give FD maturity instructions at times of any financial emergencies.
The Fixed period deposit scheme makes you avail of higher interest as compared to the interest you get on keeping the money idle in your savings accounts. The reason is that you leave the principal amount with the bank in your fixed deposit account for a fixed duration. In return, the bank is giving you a higher interest rate so that they get the ability to use the fixed deposit as cash flow.
Another reason that the fixed deposits are considered as the safe investment option is that one can close the FDs at any moment at times of emergencies, except for 5 years FDs created for saving taxes. We advise you that instead of closing the fixed deposit, there are other options given by the financial institutions to meet the financial emergencies. Financial institutions offer you a loan against your fixed deposit; you can apply for the same. It is the best way to meet financial emergencies without breaking fixed deposits. Hence, fixed deposits are a safe investment plan.
If you are looking for a long-term investment plan plus tax saving option, you can consider opening a tax saver fixed deposit scheme. The tax-saving fixed deposit is for 5 years. You cannot break the fixed deposit before 5 years, be it any requirement. All the principal amount part of your tax-saving fixed deposit becomes liable for tax exemption. Up to 1.5 lakh invested in tax-saving fixed deposits gets exemption under Section 80C of the Income Tax Act. You should always compare tax-saving FD schemes offered by different financial institutions and choose the one that is offering the best features.
The FD accounts opened by senior citizens get higher returns. The senior citizens also get tax exemptions in case the annual income with the interest rate earned on fixed deposits is not falling under the taxable slab. It is a must for senior citizens to fill form 15H to avoid any kind of TDS deductions. It is one of the best fixed deposit FD schemes for senior citizens.
When one decides to create a fixed deposit, they get an advantage to choose between a non-cumulative and cumulative interest scheme. You can determine if you want interest gains monthly, quarterly, or on an annual basis. The banks pay out interest on fixed deposits either annually, quarterly, or monthly as per the request of the investor. If you are looking to receive a certain amount of funds regularly, then it is wise to choose monthly interest payments. In case you do not require funds, you can go with the reinvestment option; it will go to your principal funds at a faster pace. The interest of the next period will be calculated based on your new amount (principal & interest earned on the previous period).
To suit the varied needs of investors, the financial institutions offer the FD tenor starting from 7 days to 10 years. Always choose the tenor carefully to get the maximum return on the investment. The interest rate varies with each of the tenors. The longer the tenor, the better will be the interest rate offered on FD investment. So, choose wisely.
If you have a bad credit score but are willing to apply for a credit card, you can apply for a secured credit card against your fixed deposit. The minimum fixed deposit requirement to get a credit card approval is Rs 20,000. You are allowed to use up to 80% of the principal value of the fixed deposit.
If you ask Indians where to park their excess or surplus funds, the majority will go with the option of fixed deposits. These investments go synonymous with financial maturity. At times of financial uncertainties, the fixed deposit proves to be the wise option.
All the above reasons convince the new-age investors to make FDs and secure a higher and guaranteed return in the future. It has become one of the most popular wealth-generating investment schemes in India. It is one of the easiest ways of initiating an investment portfolio.
If you are looking for other ways to invest, we at Shri Ram City are a team of financial expertise that guide you on how to move towards the future of financial security or if looking for high returns on corporate fixed deposits. Here you get the tips for investing in the right direction. As one of the oldest and leading Non-banking finance companies, we aim to offer financial guidance and assistance at the same platform.