Saturday, July 21, 2018

Designed To Be Different – How Do Fixed Deposits Stand Out From Others?

Designed To Be Different – How Do Fixed Deposits Stand Out From Others? star star star star star 0 out of 5 stars based on 0 votes
Sunday, July 8, 2018 by 2 weeks ago
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Returns – The sole and primary objective of making any investment. Especially, when it comes to saving lump sums, a plethora of investment options such as equities, FD, mutual funds, etc. presume the centre stage.

Most of these investment options in the market promise a quick turnover, however, in exchange for high-risks. Under such circumstances, investing in an FD can prove to be your silver lining in helping you procure risk-free returns.

An FD is a popular alternative to an investment; you put a lump-sum amount in an NBFC or a bank, agree on a fixed period of maturity, and collect your principal amount with the interest after it matures. These institutions offer hefty FD interest rates, much more than savings accounts, allowing you to accumulate more wealth over a said period.

Fixed deposits also offer multiple benefits over other types of investments. Here are a few reasons why you should consider going for a fixed deposit the next time you plan to invest your money.

Guaranteed returns –

Fixed deposits lock your principal for a pre-defined amount of time while giving a fixed interest on that amount. Assured FD interest rates are independent of market situations; even if there is a market crash, you will still receive an interest rate previously agreed upon. This makes it extremely popular among people who seek capital preservation with added security.

Tenor –

FD offers their investors with a flexible tenor option. Institutions like Bajaj Finance offer their customers a tenor between 12 to 60 months to choose from.  

Flexible repayment –

Fixed deposit schemes come in 2 different variations, cumulative and non-cumulative, offering you to choose from 2 different pay-out schemes. In a cumulative account, your FD interest rates are calculated annually, and is added to the principal and invested next year. As an investor, you receive the complete amount once the fixed deposit matures.

On the contrary, in a non-cumulative account, you receive payment periodically, commonly at the end of each month. This makes it easier for someone who requires a small boost of money every month. You can use an FD calculator to calculate and decide the best option for you.

Insurance –

Unlike a high-risk investment, FD provides you with the security of up to Rs.1 Lakh on the invested amount, doubling as an investment, and insurance at the same time.

Tax savings –

Depending on the type of deposit you choose, you can get tax benefits on your fixed deposits interests. The earning is exempted till Rs.5,000 to Rs. 10,000 (depending on the deposit scheme), after which you will be charged with a 10% interest depending on your tax slab. Also, senior citizens will get a complete exemption if their total annual income is less than the exempted minimum income threshold.

Facilities for seniors –

Financial institutions like Bajaj Finance also offer higher interest rates for senior citizens. These additional FD interest rates go as high as 0.35% over the regular interest rates.

Ease of access –

Most modern financial institutions offer online assessment, quick approval, and minimum documentation facilities when you apply for an FD. Such ease of access provides a lot more convenience than any other type of investment scheme.

Tackling emergencies –

A fixed deposit offers you the flexibility to withdraw it prematurely, in case you need access to your funds in an emergency. Also, you can take a loan against your FD. Companies like Bajaj Finance offers 60% (for non-cumulative) to 75% (for cumulative) of the amount as a loan against your fixed deposit.

All these make a fixed deposit stand out from the rest. It is an investment scheme to help you save more, generate a healthy revenue, without the risk of a market dependent investment plan. Companies like Bajaj Finance offer deposits starting as low as Rs. 25,000, with unmatched stability, safety, and high returns. 

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About Author
Aman Khanna
Member since: Sun, Jul 8, 2018
Last time online: Fri, Jul 13, 2018
Aman is working in the domain of Investment management in one of the top universities. He has published research papers and case studies in Investment and Fixed Deposit marketplace. He is an avid blogger in the domain of Investment management. you can also find him on social networking platforms.
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