Intelligent ways of Investments with Fixed Deposit (FD)

The cash in your cupboards can be grown without any efforts if you choose to opt for a smart way for your savings. There are various options for saving from saving accounts, liquid funds and fixed deposits to many more. The question is which one is the most intelligent investment option! Fixed deposit is a financial service provided by the banks or NBFC to help investors deposit an amount for a fixed tenure and with a fixed interest rate and enjoy secured returns, without having to bother about any market turmoil.

Why Fixed Deposit?

Fixed deposits are the most secure investment option and are free from any market fluctuation.

FD investments are an intelligent way of saving your hard-earned money. There is always a question as to why one should invest in FDs? The answer to that question is detailed information on the same. Given below are the benefits of FDs that make it an intelligent investment decision.

Fixed Interest Rates and Guaranteed Returns

The FD interest rate is not subject to any market volatility. In simple terms, the interest rates do not go down even when the market rates go down. Hence, your FD investment continues to earn returns at the same rate. Since the FD interest rate remains the same, the expected returns stay the same as well. You receive exactly the amount that was promised. Thus, by investing an FD, you can stay aware of your returns and plan your finances accordingly. Furthermore, the DICGC insurance scheme that offers coverage on FD up to Rs. 1 lakh, provides added security to investors.

Tax Benefits

Investments in FDs can cut down your taxes amount significantly. There are tax- saving FDs that come with a tenure of 5 years and the depositor can claim the facility of tax deduction up to an amount of Rs 1.5 lakhs per annum in a financial year.

No Extra Charges

When investing in FDs, the depositor is neither charged with any expenses at the initiation nor during the course of FD. The depositor does not have to pay extra money for the maintenance or any kind of management unlike other investment options.

High Liquidity

Any asset is called liquid when it can be easily converted into cash without any problem. FDs are categorised as liquid as they can be broken at any time. Although the investor has to pay a penalty amount, but in the end, you will still be able to withdraw the money at a time of need. And thus, you always have some certain amount you can crash on.

Flexibility of Tenure

FDs are available for different tenures. It varies from 7 days to 10 years. The investors have the choice of selecting a tenure for their FD that suits their needs or requirements. The tenure is the most important factor while investing and thus, with the facility of flexible tenure, it ensures that your money is safeguarded and you get back a reasonable amount from your investments. The payout is flexible as well. You can either opt for the regular payout by selecting a non-cumulative FD or opt for a lump sum payout at maturity with a cumulative FD.

Safer than other Investments

Fixed deposits are not vulnerable to inflation as the interest rate remains the same throughout the tenure irrespective of market ups and downs. FDs also provide the service of locking some specific part of the base amount so that one doesn’t spend all the amount as it is the tendency of human beings to spend the money when they find a lump sum amount. In addition to all these benefits, FDs also come with a specified tenure before which you cannot take out the money. In that way, one is again saved from the financial crisis or any other problems that are going to occur in the future.

Final Thoughts

As the FD investment option comes with a wide range of benefits which are investor-friendly and meets all the different expectations of an investor, it proves to be the best option among all. Another useful thing about FD is that you can calculate the whole amount that you will get at maturity using an FD calculator. It can be a beautiful gift for your loved ones or can be financial support in your old age period.