Fixed Deposit-Why This is a Smart Investment Option
Wish to invest in a Fixed Deposit? You should definitely go ahead since this is one of the smartest investment options available for citizens. An FD can help you grow your hard-earned money and plan for future goals without any risks whatsoever.
An FD investment is both strategic and highly secure. You can always use an FD calculator to work out the returns in terms of interest income from your fixed deposit. The Fixed Deposit interest rates are higher than savings bank accounts.
As a result, instead of keeping your money idle in a savings account, you should invest in a fixed deposit for higher returns. The interest rates offered by various banks and NBFCs can vary between 6.5-7% and you can sometimes get higher interest rates up to 8% or even higher at some NBFCs. Senior citizens normally get between 0.25-0.50% extra as interest rates on their fixed deposits.
Advantages for the Fixed Deposit Investment Scheme
The biggest advantage offered by fixed deposits is that you do not have to worry about any market fluctuations. These investments are not dependent on market conditions or fluctuations.
The interest rates are pre-fixed and so is the tenor. Your investment amount will also be totally secure. In a scenario where gold prices are fluctuating and real estate prices are volatile, it makes sense to invest in fixed deposits since there is no risk involved and you still get to earn handsomely in terms of interest income.
TDS on Fixed Deposit
Although interest income from FDs is taxable (TDS is deducted if interest income exceeds. Rs.10,000 annually), there are tax-saving FDs with specific lock-in periods as well.
You can earn more interest if you choose to compound your FD interest and receive the full payout at the time of maturity and if you want a regular income from your FD, you can choose between monthly/quarterly/half-yearly/annual interest payouts.
The lock-in periods of Fixed Deposits can range between 7 days and 10 years but you should avoid withdrawing money in these phases since you will have to pay a penalty otherwise.
Another reason why fixed deposits make for smart investments is that you can always raise funding against your fixed deposit. Sounds confusing?
You can apply for a loan against your Fixed Deposit whenever you require funds urgently. The biggest advantage here is that you do not have to prematurely break your FD to tackle such situations.
You can keep your FD intact while taking a loan up to 70-80% of the deposit. This comes in really handy when it comes to meeting unforeseen expenditure.
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Category: Investing
