A fixed deposit, commonly known as an FD, is a financial instrument provided by the monetary institutions. You can earn a fixed interest rate if you save your funds as a fixed deposit in a savings account. This type of deposit is popular because of the stability it offers. An FD will earn a higher interest rate on your deposited money than on the funds of a regular savings account. You have to deposit your funds for a fixed tenure, which means you cannot withdraw the amount without losing a small part of the interest rates.
You can always open a premium savings account to avail of the customized provisions for your banking and financial needs.
These are specially designed for you to suit your lifestyle and preferences.
Why should you invest in fixed deposits?
You might be wondering why you should invest in an FD because there is not much of a difference with a conventional savings account. Well, there are several perks that you will have once you invest in one. So, let us look into them.
1. No risks.
Risk is the one word that is hard to find, and yet everyone seeks while investing money. But if you open an FD account with banks, be it a small finance bank or commercial ones, DICGC (Deposit Insurance and Credit Guarantee Corporation), an RBI (Reserve Bank of India) subsidiary, ensures complete safety up to Rs. 5 lakh. Make sure you open in a reputed bank for better services.
2. Predictable returns.
As the interest rates and tenure of FD are fixed, it becomes easier for you to calculate your returns, which will help you plan better.
3. Returns guaranteed.
Fixed deposit pledges fixed returns on your investments. As the interest rates are fixed and not influenced by the stock market, the banks pay you in return for what it had committed.
4. Tax rebate.
Almost all the financial institutions offer a tax-saving FD scheme for a term of 5 years. Under this scheme, while filing your ITR, you can claim deductions under section 80C of IT Act, 1961.
5. Avail loans.
You can borrow loans against your investment in a fixed deposit. The amount that you can avail is up to 90% approximately of your FD amount.
6. Affordability.
It is an affordable option to invest your earnings and gain returns as you can start from as low as Rs. 100. However, most of the leading banks have set a minimum deposit limit of Rs. 1000. But it is always suggested to invest most of the ideal money in a fixed deposit for better returns.
7. Flexible tenure.
An FD tenure is quite flexible. You can choose to invest from a minimum of 7 days up to 10 years. You can decide on the term as per your requirements.
Conclusion
A fixed deposit is the most sought-after investment strategy. It provides you with guaranteed returns and risk-free savings.
You can also save on your taxes if you invest your earnings in a fixed deposit savings account. It also provides you with several other benefits, such as borrowing a loan against it. So, you see, if you are looking to invest in something with fixed and assured returns, we suggest that you go for a fixed deposit savings account. However, you have to choose which financial institution to invest your earnings as per your requirements.
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