Is it Beneficial to Invest in a Fixed Deposit?

Everyone loves to save money, don’t they? Just like you and me, Indian parents are taught how important it is to save money. As per a recent survey published by SEBI (Security and Exchange Board of India) in August 2019, over 90% of Indian households prefer to invest their money with fixed deposits. With an increase in the rural population and urbanization rates increasing rapidly in India, these numbers are expected to grow even more.

Fixed deposits are the safest way to invest. You can invest your money in a fixed deposit account with any scheduled bank, NBFC or co-operative bank, as there are no high risks involved. The interest rate on fixed deposits remains low and committing your investment for a long term ensures that you do not have to worry about fluctuations in market conditions and make it more secure for you financially.

What is a Fixed Deposit?

Fixed deposits are one of the safest investment instruments available with a verifiable rate of return. They provide peace of mind as you know how much returns you will get and at what rate, which is why many investors choose to go for a deposit.

Advantages and Benefits of Fixed Deposit

Developing a Habit of Saving: 

Market experts vouch for the fact that investing in mutual funds that are based on equity or debt is the right way to go as it helps you build wealth gradually. In case you are skeptical about investing a lump sum amount at once, you can gauge your comfort by making an initial deposit and setting up a systematic investment plan. You can periodically evaluate your progress by transferring a fixed amount into one.

Safer Investment:

Investing in FDs is one of the safest options for your hard-earned money. As an investor, you are concerned about the safety of your money. In case of bank-held FDs invested by an individual, the amount is protected under the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance cover.

High Returns:

In India, fixed deposits are a popular savings option for many customers. Banks and NBFCs offer fixed deposit rates above 5% for maturities ranging from 5 months to 7 years. This is one of the reasons why fixed deposits have been the top choice for Indian investors. In comparison, current interest rates on government securities are lower.

Save Taxes:

There are a variety of fixed deposit (FD) options with banks. Some types of FDs are tax saving FDs or senior citizen FDs that allow. You to get a deduction on your investments up to ₹1.50 lakh every year from your taxable income.

Premature Withdrawal:

Fixed deposit is an excellent way to save money for a fixed period of time. You get interest on the deposit and the ownership of the deposited money remains yours. You just have to restrict yourself from using the deposit before it matures.

Higher Interest for Senior Citizen:

Senior citizens may be eligible for senior citizen FDs. These are also known as senior citizen schemes. These types of Fixed Deposits offer interest rates that are higher than their counterparts and can help. You earn a substantial amount in interest over the course of your investment.

Overdraft against FD:

Since the bank has provided you with an overdraft facility, you can continue to make investments. In the market without losing money. For example, instead of depositing Rs 75 lakh in your FD, if you have to invest Rs 80 lakh. You can go to your bank and get an overdraft facility of up to 90% of Rs 75 lakh – Rs 66.5 lakh (to be precise). The balance remaining of Rs 13.5 lakh will be kept in a deposit account for free! For more detail :

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