Investment if done at the right time and in the right direction can reshape the future of an individual. There are many investment sources in the market; some may provide high returns on investment, and at the same time, they come with high risks that can make you lose your invested capital. To make sure that you gain satisfactory returns from your investment, you can opt to invest in Fixed Deposit.
What is a Fixed Deposit?
Fixed Deposit is a service offered by banks and Non-Banking Financial Companies (NBFCs). wherein you deposit a considerable amount of money with your service provider and gain returns in the form of interest rates offered by them.
Why Fixed Deposit?
FDs are one of the most popular and recommended options in India when it comes to investments. They are the most recommended option due to the following reasons:
They are safe:
The best thing about investing in FDs is that they are much safer than the other investment sources in the market. There are sources like mutual funds that can offer high returns on your investment, but the returns that you gain from them are totally dependent on the market conditions. On the other hand, FDs are not affected by the market’s ups and downs. investor gets his entire invested capital at the time of maturity.
Insurance of the amount up to INR 1 lakh:
There are times when people are afraid to invest in fixed deposits. fearing that they may lose their money if the service providers close down their offices. To tackle this fear of the people, the service providers offer insurance in an amount that ranges up to INR 1 lakh.
Better perks for senior citizens:
If you are above the age of 60 years old and want to have a constant flow of funds to support you financially. you can choose to invest in senior citizen fixed deposits. There are many NBFCs that offer additional benefits like flexible tenure, high-interest rates, and increment of interest rates on renewal.
Closure of FDs before maturity
Though it is recommended that you do not end your FDs before the maturity date as doing so may result in a penalty that will be charged on your invested amount. Some NBFCs offer flexible tenure without a lock-in period that enables the investor to withdraw the invested amount before the maturity date without charging any penalty.
If you are looking for a way to save on taxes, you can invest in the tax-saving FDs that are offered by many service providers. FDs can be a useful tool to save taxes and avail returns. According to Section 80C of the Income Tax Act, the payments made toward fixed deposits can be availed for tax deductions or returns.
Earn more through frequent compound:
Interest rates generally compound every year, and the compounded amount is added to the account of the investor. To earn more from your FDs, you can play-wise by choosing a frequent compounding duration. NBFCs offer compounding durations that start from monthly, quarterly, half-yearly, and annually. To earn more, you can choose a low compounding duration that adds returns more frequently to your account and at the same time if you deposit the interest gained in for your FDs then you will increase your investment amount which will indirectly affect the amount that you gain on your returns.
Read More: Fixed Deposit Calculator
The above-mentioned points clearly justify the benefits that can be availed by investing in FDs. In order to get the best returns from your Fixed Deposit investments, it is recommended that you invest in FDs offered by the NBFCs.