Investment can be done for a plethora of purposes. It can be to beat inflation, generate a retirement fund, or save money on taxes. While there are a variety of choices available to fulfil such needs, most people choose fixed deposits.
A fixed deposit is a type of investment that has a predetermined term and interest rate. Because it is unaffected by market swings, it is considered one of the safest investment options available. It’s a straightforward and uncomplicated investing option that’s ideal for risk-averse investors.
How to choose the best fixed deposit account online for your savings?
Fixed deposits provide consistent growth for your money while also providing peak security and sureness. The bank will repay your investment, plus interest, once the fixed deposit period has ended. Fixed deposits, in addition to being a safe investment, can provide extra benefits such as a higher rate of interest for older residents and a substantial investment maximum. Furthermore, under the Income Tax Act, fixed deposit programmes are eligible for tax benefits.
Numerous banks provide a variety of fixed deposit options with competitive interest rates. Choosing the right decision from so many possibilities might be difficult. Fixed Deposits come in a variety of traits, as well as varied tenures and interest rates.
Here are some factors for determining the eligibility of a fixed deposit:-
- The tenure – Fixed deposit interest rates vary depending on how long they are invested. Fixed deposits with a longer duration typically have higher interest rates. Long-term commitments bind your money to the bank, limiting your liquidity alternatives. If you’re saving for a short-term objective, short-term FDs are a superior option. Fixed deposit terms are known to span from seven days to ten years. It is always preferable to choose a bank that provides tenure flexibility.
For instance – Yes bank FD rate ranges between 3.25% p.a. to 6.25% p.a duration covering from 7 days to 10 years. Senior citizens are entitled to a better rate of interest.
- Interest rates & Additional benefits – When selecting a fixed deposit, interest rates appear to be the most significant factor to consider. Higher the interest better the return. Apart from interest rates, banks provide a variety of other services, such as loan facilities against fixed deposits for unexpected financial needs. Some banks additionally provide auto-renewal and overdraft services to ensure that funds are available at all times.
- Premature Withdrawal – It is a prudent strategy to review the premature withdrawal terms and conditions of FD plans before taking out a fixed deposit with a bank. The majority of banks provide a premature withdrawal rule for FDs on their websites. Furthermore, a few banks do not charge penalty rates for early withdrawals of fixed deposits, providing you with a convenient liquidity choice.
- Online fixed deposits – Online fixed deposits are a simple and handy way to invest. You may easily move funds from your savings account to your fixed deposit account using an online fixed deposit account.
Fixed deposits provide one of the most advantageous rates and terms to its customers. The goal is to assist you in accumulating savings and growing your money at a rate that ensures a secure future for you and your family.
Here are the advantages and features of a fixed deposit account
Most banks strive to provide you with a secure and reliable banking environment in order to assist you in achieving your financial objectives. Few advantages are listed below:
- Flexibility to select a suitable duration
The duration of your fixed deposit can be as short as seven days and as long as ten years. This gives you the freedom to choose a suitable duration based on your investing objectives.
- Versatile interest pay-outs
You can claim the interest gained on your principal amount in two methods – cumulative and non-cumulative. If you choose the cumulative option, the interest on your fixed deposit will be compounded and sent to your account at the end of the term. Non-cumulative interest can be collected at regular periods, such as monthly, quarterly, or annually.
- Doubles as a liquid asset
Liquid assets are those that can easily be transformed into cash. Fixed deposits are liquid assets since they allow consumers to sweep money in. The option allows you to conveniently access your fixed deposit funds without incurring a penalty, as is customary in the business (fixed deposits under the tenure of fewer than 182 days).
- Higher rate of interest
You can yield high interest by investing your money in fixed deposit accounts. Investing at a higher rate of interest can help you stay ahead of the inflation curve. However, you should double-check the interest rates with the bank because they are subject to change.
- Auto-renewal of policy
If you forget to specify whether your fixed deposit should be renewed or withdrawn at the end of its term, the bank will automatically renew it. The entire sum is re-invested for the same time at the end of the tenure.
- Overdraft facility
You can avail an overdraft from banks, if you have a fixed deposit. You can borrow up to 90% of your total fixed deposit amount in an emergency. It does not impact your savings.
- Tax saver deposit
A lot of banks offer a Tax Saver Deposit plan that pays the same rate of interest as a standard fixed deposit while also helping you lower your tax liability. The plan is locked in for five years.
- Inter-city banking
The inter-city banking facility is one of the distinguishing qualities banks offer. It allows customers to use any offices across India.
Conclusion:
Fixed deposits have long been the popular investment plan for the majority of the people. This is because, unlike other similar products, it provides investors with guaranteed profits and is not volatile. Its simple structure and various benefits have worked towards its benefit.Furthermore, the conditions on which banks offer fixed deposits ensure that your capital grows steadily.
