Fixed Deposits (FDs) are an essential part of the investment portfolio. This investment product offers – stability and comfort. And this benefit you won’t find in any other market-linked investment options. People who do not want to put their funds at risk but also want to invest can choose a Fixed Deposit account. This way, they can generate sustained wealth over time. Here is why you should keep your savings in a Fixed Deposit account.
What is a Fixed Deposit
A Fixed Deposit is an investment option that brings stable returns to the investor. It is a fixed-term investment, so the interest returns stay the same for the entire life of the FD. Banks offer Fixed Deposit schemes under various categories to benefit all customers. These include –
- Regular Fixed Deposits
- Tax-Saving Fixed Deposits
- Senior Citizen Fixed Deposits,
- Flexi Sure Fixed Deposits.
While certain FD schemes, such as Senior Citizens FD, offer higher interest returns to investors, a Tax saving Fixed Deposit plan provides the dual advantage of interest returns and tax savings.
Reasons to Invest in a Fixed Deposit
- Assured returns: Investments like shares and mutual funds returns change as per the market condition. Well, this is not the case with a Fixed Deposit investment. In an FD, you’ll get an assured return. For market-dependent investments, no one can guarantee returns. On the other hand, in a Fixed Deposit account, the bank decides the interest rate applicable to your deposit amount. The return of an FD is based on several factors, like the duration of the FD, the investment amount, and the FD scheme chosen by the investor. The interest rate remains unchanged for the entire life of the FD investment, irrespective of the market conditions. And in case the bank reduces the FD rates, the investor will continue to enjoy the predetermined interest earnings on their FD scheme.
- High-interest returns: The right FD scheme and investment duration can get you the desired returns. Open an FD with a reputed bank; doing so can get you a return as high as 8.05% on some FD schemes. Opt for a cumulative Fixed Deposit to further increase the interest earnings from a Fixed Deposit scheme. A cumulative FD plan offers the benefit of compounding to the investor and provides interest on the interest amount. It increases your overall return.
- Capital protection: The money stays safe from any market-linked risk in a Fixed Deposit. And when the Fixed Deposit matures, the entire invested amount and the interest quotient will be transferred to your linked bank account. There is also a reinvest option in which the maturity amount grows further.
- Loan against FD: In the case of a financial emergency, don’t withdraw funds prematurely from a Fixed Deposit. Instead, apply for a loan against Fixed Deposit to get quick financial assistance. This way, FD interest earnings won’t stop and you can comfortably meet the urgent cash requirement.
- Credit card against FD: An individual who does not have a strong credit score or a good credit history may find it difficult to get an unsecured credit card. In such a case, apply for a credit card against the Fixed Deposit scheme. This way, you can get a credit card. And the timely bill payments of such a credit card will help improve the credit score.
- Flexible tenure: Fixed Deposit schemes allow the investor to choose a duration as per their needs. Opt for an FD scheme for as short as seven days or as long as 20 years.
- Online investing: Using Net banking and Mobile banking channels of the bank, easily open a Fixed Deposit account. The investor can open an online FD account for a maximum duration of 10 years and enjoy the benefits of safe investing from the luxury of his home.
Fixed Deposit schemes offer several additional benefits to investors. You can choose between a single or a joint FD account and add a nominee to take care of the FD investment in the case of a mishap. Now open a Fixed Deposit account and grow your idle fund without thinking about the market up and down as FD remains unaffected by them.
