When you want to invest your hard-earned money most safely with good returns, then invest in a fixed deposit. When you have a fixed deposit, you can be (change word)about having both safety and good returns. The fixed deposit has been the best investment option for investors for many decades now.
There are numerous investment options available, still fixed deposits seeming to be one of the safest and convenient investment options. When you plan to invest on a fixed deposit, here is everything you need to know about it:
What is a Fixed Deposit?
When you have a lump sum of amount and don’t want it to go in vain, then the fixed deposit is the best investment. The lump sum of the amount will be accumulating in a fixed tenure with a fixed interest rate. At the end of the tenure, you will be getting the amount you invested along with its accumulated interest which will be a great asset to you.
Both banking and Non-Banking Financial Institutions (NBFCs) offer fixed deposits. There are two types of fixed deposits: Cumulative Fixed Deposit and Non-Cumulative Fixed Deposit. In Cumulative Fixed Deposit, you will be given both your interest and the invested amount at the end of the tenure. Whereas in a Non-Cumulative Fixed Deposit, you can choose any frequency at which you can get your interest rates paid out, and the invested amount will be given at the end of the tenure.
How does a fixed deposit work?
When you have opted for a fixed deposit, your invested amount will be locked in for a fixed tenure which you choose. And the amount invested will keep on earning interests upon a fixed rate till the tenure end. After the tenure end, you will get your invested amount which has increased itself substantially to give you high returns.
How to open a fixed deposit account?
When you choose to open a fixed deposit investment, you should first do thorough research on all the financial providers available. When you have compared all the financial providers and choose the one which best suits you, you can contact them directly or through online mode to let them know your requirements.
Once you have informed them about your requirements, they will let you know the fixed deposit product which they offer. When you have chosen the financial provider, they will request you to submit minimal documentation after that your loan will be approved and cash will be disbursed quickly
Benefits of Fixed Deposit:
If you are a conservative investor, then opening a fixed deposit investment is the safest and best option for you. It is one of the easiest and quick processing investment option, which is very famous among investors who are looking for the safest and high return investment.
Here are specific benefits which let you know why a fixed deposit is the best investment option:
Unlike investments like the stock market, fixed deposits don’t depend on the market for its returns. So it is highly a risk-free investment which doesn’t fluctuate with the market rates. So when you are investing in a fixed deposit, you can rest assured that your investments are very safe and you will get a high guaranteed return at the end of the tenure.
The amount invested in a fixed deposit can be withdrawn in case of emergencies with a small penalty. You can let your financial investor know about your emergency and can withdraw it without any further waiting. The penalty will be very less compared to that which you get while selling a stock or real estate in short notice.
The fixed deposit has very flexible tenure which ranges from days to years, depending upon your needs you can choose the one which best suits your financial stability and requirements. When you have a significant financial need in the future, then you can choose the fixed deposit tenure higher till that time so that you can keep gaining interest also get benefited out of it. You can have several fixed deposits as you want with different tenures depending upon your need.
Encourages saving habit:
The fixed deposit will require keeping a fixed amount for a fixed tenure for it to get accumulated interest for the amount at a specific interest rate. It will ensure that you are not wasting the money unwantedly and saving it for future requirements as well as gaining some returns from it. It is the best option which will encourage your savings habit as well as let you invest your money efficiently.
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Higher rate of return:
The interest rates offered for fixed deposits are higher than any regular savings account, which makes it very special compared to other investment options. Also, it has high and guaranteed returns which makes it more special.
Flexible interest payouts:
When you choose a non-cumulative fixed deposit, you can make sure your interest gets paid at regular intervals. The fixed deposit interest payout interval will be chosen by you, and it might be a monthly, quarterly, half-yearly or annual basis. When you are a senior citizen, this amount will be beneficial for your regular financial expenses until maturity.
Loan against FD:
Unlike other investment options, when you have a fixed deposit, it will help you in a lot of ways. When you are in an emergency need, then you can use the fixed deposit as collateral and get a loan against it. It is highly beneficial as you will still get your fixed deposit interests also you will be able to get a low-interest loan against your fixed deposit.
Tax Saver FD:
The tax saver fixed deposit has a lock-in period of five years until which you cannot close the fixed deposit with a higher interest rate. As per the Income Tax Act, 1961 Under Section 80C, you can avail up to Rs.1.5 Lakhs by investing in a tax saver FD. You can also be aware that when you have invested in the tax saver FD which has the tenure for five years, it is not withdrawable also you cannot apply for a loan against it.
Speciality for Senior Citizens:
When you are a senior citizen, you can avail additional tax benefits than ordinary people. Also, when you are a senior citizen, the interest rate for your fixed deposit will be increased by an additional percentage which will be highly beneficial.
The fixed deposit is the best-known investment option which will help you a lot when you want to save more and earn more with your idle money. It’s the right time to invest in a fixed deposit and gain higher returns for your forthcoming future.