There are plenty of options to invest money safely for the future, including the Public Provident Fund (PPF), Employee Provident Fund (EPF), Recurring Deposits (RDs), and Fixed Deposits (FDs). FDs are the most ideal and secure method of saving for the future when comparing these choices. You can select from various FD types, including tax-saving FDs, and take advantage of tax advantages provided by Section 80C of the Income Tax Act.

FDs are attractive and risk-free investments that also earn interest. Banks and other financial organisations provide attractive interest rates; some even let customers withdraw money early without incurring fees. An FD investment is unaffected by market swings, so when it matures, you will receive the principal amount along with interest earned.

Fixed Deposit: What is it?

An FD is a type of investment where investors put aside funds intending to receive higher returns than they would receive from a Savings Account. People deposit a lump sum into Fixed Deposits for a predetermined time to receive FD interest rates.

Both banks and Non-Banking Financial Companies (NBFCs) offer FD Services. In this case, you can decide whether you would want to receive interest periodically or at maturity. Additionally, you may have to pay a premature withdrawal fee if you take out your deposited funds for whatever reason.

Features of FDs?

Now that you know what FDs are, it’s time to learn some of their features:

  • One of FD’s finest characteristics is its fixed rate of Interest. An FD is one of the most dependable and secure investment plans for anybody looking to begin their financial adventure because its rewards are unaffected by market fluctuations. 
  • Your FD can be started for a week to a period of up to ten years. But remember to look into the interest on FDs before choosing any plan, as the rate of return mostly depends on the duration. 
  • Investors between 18 and 50 are eligible to open an account. 
  • Interest is compound which allows you to optimize your revenue.

What Benefits Do FDs Offer?

A high percentage of Indians have chosen FD accounts since they offer multiple benefits. Here is a list of some benefits they provide:

Secure Investment Plan

A safe investment strategy is among the most significant Benefits of Fixed Deposit. FDs are one of the best investment choices if you’re looking for an assured return on your investment. They provide a fixed rate of interest that is not subject to changes in the market. In other words, investors will receive their principal amount back along with additional interest over the FD’s duration.

Easy Investment

FDs are simple to set up online or at the bank branch with a savings account. You can choose to renew or credit the sum for another predetermined period when the FD matures. It makes reinvestment easier.

Low Risk

This type of investment is less risky as the return rate remains unaffected by market volatility. 

Flexible Tenure

Customers can determine the length of their FDs with banks. Many banks provide periods that range from a week to up to ten years. You can choose a tenure based on your goals.

 

Tax-Saving Benefits

Many banks in India provide Tax-Saving FDs to their customers, reducing the taxable amount. You should get in touch with your bank to have a whole rundown of all the potential benefits.

Loan Against FDs

A person can utilise the investment made in an FD account to get a loan. Usually, you can get a loan of up to 90% of the value of an FD investment.  

Access to Compound Interest

Customers can choose if they want their interest paid out at stipulated periods or reinvested. Should the interest earned be reinvested, you also earn interest on interest. 

Overdraft Facility Against FD

Instead of liquidating your FD and incurring fees, you can simply use an overdraft against it if you are in a tight financial situation. The overdraft is up to 90% of the entire amount of your FD amount. An overdraft against FD that you can get right now through net banking requires a minimum FD value of Rs 25,000 and a minimum duration of 6 months and 1 day. While your FD is still earning interest, you only need to pay back interest on the amount pulled out.

Benefits for Senior Citizens 

Senior citizens can take more advantage of Fixed Deposit accounts than regular citizens. Banks and financial institutions generally offer a higher interest rate to senior citizens. The difference can be as high as 0.5%.

Wrap-Up

FDs are the most dependable financial instruments available in the market since even those with minimal risk tolerance can invest their money in them. 

Not only do they provide interest on your savings, but they also provide tax benefits to all investors. So don’t waste time, do your research and invest your money in an FD today. 

 

By Nora18

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