It is wonderful to have optimism and to think that people will live secure lives free from insurmountable difficulties. You must, however, be realistic and ready for the bad days. Fixed Deposits (FDs) are a trustworthy financial safety net that you can invest in. It is considered the preferred investment product by investors worldwide due to its numerous advantages. A fixed deposit, also referred to as a term deposit, is one of the most dependable financial instruments available. Additionally, an online free tool like an FD return calculator is there to assist you in choosing the right FD amount and tenure. Top-listed financial institutions like Bajaj Finserv provide this tool for free.
Fixed deposits are the best financial instruments for people looking for safety and certainty. You receive safe, stable, and fixed returns on a defined date based on your selected interest payment plan. Interest payment schemes include monthly, quarterly, and half-yearly options. You can also choose to receive cumulative interest payments and invest in FDs to accumulate a lump sum. You must use an FD return calculator to calculate the total interest amount for both cumulative and non-cumulative FDs. This way, you can understand the difference in interest amount. Then it will be easy for you to take a decision on whether you want to invest in cumulative or non-cumulative FD schemes.
Overview of a fixed deposit account
- Fixed deposits-
- One of the numerous investment choices available.
- Customers must make a fixed deposit for a predetermined amount of time.
- After maturity, the principal amount and interest earned are credited to the customer’s account.
- If the FD money is reinvested beyond maturity, compound interest is paid.
- Who offers FDs-
- Ways to open FD-
- Types of FDs-
- Bank Deposits
- Company Deposits
- Regular FDs
- Standard FDs
- Senior Citizen FD
- Cumulative Fixed Deposit
- Non-Cumulative Fixed Deposit
- Tax Saving FDs
- Flexi Fixed Deposit
- NRIs FDs
- Premature withdrawals- Allowed, but there will be a cost.
- Interest rates- Interest rates vary from one financial institution to another.
Advantages of fixed deposits
Let’s examine the factors that contribute to fixed deposits’ widespread appeal. The following benefits of fixed deposit are available to you without any restrictions. You are free to hold as many fixed deposits as you like in different quantities.
- Fixed returns- Your FD’s interest rate is fixed, so regardless of the state of the market, your investment is safe. You will continue to earn the fixed interest amount, or fixed returns, on a fixed date according to the payment option you select.
- Capital security- When using FDs, you don’t have to be concerned about capital degradation. Your funds remain in the bank, which promptly pays you the interest that is due. You receive your entire investment back when the FD matures. As a result, you don’t suffer any investment losses.
- Customisable- You can open an FD for as little as Rs. 5,000 without a cap. The amount you can invest in an FD is not capped. You have the option of selecting a short, mid, or long-term tenure. Anyone can start an FD because of this.
- Easy liquidity- You can utilise your fixed deposit as assistance if you run out of money. You are permitted to withdraw both the principal of your FD and any interest that may have grown during that time. Since the FD withdrawal procedure is quick, you can immediately access your money.
- Loan against FD- You may need a loan but lack any available collateral. Don’t worry; you can acquire up to 95% of the loan amount by pledging your FD. The FD amount and the terms and circumstances set forth by your financial institution will determine the loan amount.
- Tax-saving- The Income Tax Act of 1961’s Section 80C allows individuals to deduct up to Rs. 1,50,000 from their taxable income. Your investment meets the requirements to be tax-deductible under this section only if you invest in a tax-saving fixed deposit.
- Insured savings- The RBI subsidiary Deposit Insurance and Credit Guarantee Corporation insures your deposit up to Rs. 5,00,000. This implies that your FD is safe even if the financial institution is experiencing financial difficulties.
- One-time effort- You don’t need to monitor the market to understand how your FD is doing. Additionally, there is no jargon used. This makes opening an FD simple for someone unfamiliar with the concept of saving and investing, like a young student.