Fixed deposit is a type of investment that has been relatively stable for the majority of Indian finance and investment history. They’re usually hailed as the layman’s best bet at earning a good interest. It’s a good way to make your money work for you and earn returns. This is because FD’s are often associated with very low risk and a better chance at finding an interest rate that works in your favour. Some of the highest FD rates are pretty appealing to most of us.
Even an investment novice can make a fixed deposit work, but being aware of how to make the most out of your investment is something that you can do well to know. Regardless of what you may or may not have heard, the benefits of fixed deposits outweigh any drawbacks that they may be associated with. If you play your cards right, there’s no reason why you can’t get decent returns on your investment.
Why Go For Fixed Deposits?
Besides being one of the safest investment options in terms of returns, there’s also very little risk you have to bear when you’re investing in an FD.
You may be wondering how that is. When investing in a stock or real-estate market, you take a very big risk of losing all of your capital. But without the wild fluctuations of those markets, FDs don’t have the risk of dropping your investment.
Other features of FD’s which makes them a great choice include;
- A normal savings account will get you half the interest rate than an FD would. That should be reason enough. This is because you’re depositing a principal amount for a fixed duration, and demand a higher interest. There’s even a way of doing your fd interest calculator that tells you exactly how much you’ll earn.
- FDs are also a great back-up plan. Should you require a loan of any kind, simply take one against your FD instead of a personal loan from a bank or NBFC. This gives you access to about 90% of your total funds in the FD account, with a lower interest rate than most traditional loans.
- Besides that, FD often forces people to cultivate the habit of savings. If you’re someone who has trouble when it comes to managing expenses, then getting an FD can be good for you. This will force you to lock in your money, locking in the liquid funds until the end of the tenure.
Benefits of Fixed Deposits
Some benefits of FD include;
- Easily Withdrawable:
Despite the fact that there’s a fixed tenure and you can’t withdraw or use that principal amount or interest earned anywhere, there are still provision for you to withdraw money from your FD amount. This makes it an easy liquid fund, which cannot be seen with other investment options. Your maximum loss would be the interest income that you could have earned on that account. This is why it’s a good idea to split your principal amount. This way you only have to break one or two of those accounts and continue earning interest on other accounts.
- More Flexibility
Any principal amount can be deposited for any tenure. This can range from one to 10 years, at any interest rate, preferably the highest you can find. This way you can gain a considerable amount of interest, while also ensuring that you have a variety of FDs to ensure that you’re never without cash at any time.
When opting for fixed deposits, don’t forget that having liquid funds at hand can always help, since you may need cash on hand for any emergencies and daily expenses.