A fixed deposit grows your savings at a fixed interest rate, and it is preferred on risk-averse investors as the invested capital remains unaffected from the fluctuating market conditions. However, these are not the only advantages that fixed deposits bring to the table. Investing in fixed deposit smartly and picking up the right FD plan can help you achieve your financial goals.
Here are some distinguished benefits of fixed deposit plans:
Assured and higher returns
Fixed deposits guarantee fixed returns post maturity, and you can calculate it with the help of an FD calculator. This calculator will come handy if you don’t know how to calculate fixed deposit interest as it calculates the FD interest automatically based on the details provided by you.
Banks are currently offering interest rates in the bracket of 3.5 to 6% for an FD tenor of 1 year or higher. Corporate FDs such as Bajaj Finance FDs provide higher interest rates up to 7.35%. These FDs also provide assured returns as they are rated highly for safety and stability by credit rating organizations like CRISIL & ICRA. Therefore, you can now grow your savings quickly without having any adverse effect on your deposits.
Higher rates for senior citizens
The FD rates for senior citizens are a bit higher than FD rates for regular customers. For instance, Bajaj Finance offers a 0.25% additional FD rate to senior citizens. This different FD rate can be used to obtain higher returns post maturity.
Fixed deposits prove to be your contingency fund that can be used to cover unexpected future expenses and emergencies. NBFCs like Bajaj Finance also provide collateral-free loans on FDs that help you fund your emergency needs without breaking your FD.
Flexibility of investment
You can pick an FD type according to your financial goals and plans. If you plan for your retirement, you can book a cumulative FD of a longer tenor.
Cumulative FDs provide higher returns as the interest gets compounded every quarter, and you receive the real part with the deposited amount at maturity.
If you do not have a regular income source, you can opt for periodic interest payouts to fulfill your daily expenses like electricity bills, rent, etc. Some banks and finance companies offer the option of monthly interest payouts as well.
To beat inflation, you can invest in multiple FDs of shorter tenors. As your deposits don’t remain locked-in for an extended period, you can deposit at a higher FD rate whenever you get such opportunities.
You can also book FDs of both shorter and longer tenors to fulfill your short-term goals while proceeding towards your financial objectives in the long run.
Bajaj Finance offers a multi-deposit facility that enables you to open multiple FD accounts of different tenors, amounts, and FD types. A single cheque used to make the initial deposit for all the FDs at once.
Apart from that, you get a 0.10% extra FD rate on using an online FD form to book an FD, and you also get the option of tracking your deposits online by using Experia, the customer service portal.
Fixed deposits are considered safe from market risks, and they also provide fixed returns to the investors. However, they also offer many more benefits, like online account opening and tracking options. The additional interest rate for senior citizens, etc. You can opt for company FDs like Bajaj Finance FDs that are offering interest rates up to 7.35% for availing higher returns. You can also choose an FD plan as per your financial plans and laddering deposits. It will help you to attain your short term goals and long term financial objectives.
Benefits of Investing in Fixed deposit
Tax-saver FD draws tax benefits under section 80C of the Income Tax Act, 1961. It comes under the Exempt-Tax-Exempt category. Even though the interest earned on such FDs is taxable, the investor will deduce a maximum of Rs. 1,50,000 for the amount invested.
FDs are secured investments with no risk. Unlike other investment tools, FDs are free from all kinds of market disturbances. The investor, at the end of the maturity period, gets a guaranteed sum of money. This is hence an appealing investment for risk-averse investors.
A liquid asset is the one that can easily convert into cash. FDs, too are liquid. Although the holder charged a penalty, FDs can be withdrawn as per the need. Thus, the investor always has a fixed sum of money to the bank.
However, in the case of Bajaj Finance Fixed Deposits, you can avail of a loan against your FD without actually breaking it. This way, you can deal with your emergencies while earning interest on the rest of your deposit.
The tenure of FDs differs from 7 days to 10 years. You can invest in FDs for a tenure that suits your business or personal needs.
Will FD rates increase in 2020
Will FD rates increase in 2020 is a concern of every FD investor. There are the least chances to get the highest FD Interest Rates in India this year. The major reason behind this is that financial markets have gotten profoundly unpredictable due to the recession. Panic sell-offs and wealth destruction in Indian markets are lining up. So while responding to this situation, RBI and the central government endeavor to prevent financial markets from freezing up due to illiquidity.
The recent cut in Repo and reverse repo rate makes the increase in FD rates far away from possible.
Demonetization tooled to the surplus of funds with banks meaning less demand for deposits. The lesser the demand for deposits, the lesser the FD rates.
Summing up, I hope this article helps you make a well-informed financial decision in these troublesome times.
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