Fixed deposits should be the first priority of the income earners to generate savings rather than spending them. At a time of financial emergency, your savings can help you stand out and overcome worst situations such as medical emergencies or a financial crisis. This is the most popular and risk-free investment plan which lets you withdraw your savings anytime you want. In some cases, a fixed deposit is not available for withdrawal and has a specific date of maturity. Fixed deposits are considered as the safest and most reliable investments schemes.
Fixed deposit accounts can be opened online with the integration of online banking features provided by numerous commercial banks. It takes not more than a few minutes to open a fixed deposit account online successfully. A fixed deposit account comes in flexible periods of investment plans and makes funds available whenever needed.
You can start a fixed deposit account with a minimum deposit amount of INR10,000 when you visit a bank. With online services such as mobile and internet banking, fixed deposits can be opened with a minimum deposit of INR 5,000. You can select either simple or compound interest for your savings to suit your needs.
A fixed deposit generates the idea of a regular habit of savings and can be organized for auto-renewal when the term expires. Besides, this financial tool is of great use for risk assessment as the returns on your fixed deposits are unharmed and remain constant even during a volatile market situation.
Below are the five reasons you should start investing in fixed deposits:
Helps to get assured higher returns –
A fixed deposit will offer you higher profits on the invested amount rather than putting your money in a savings account. Interest rates on fixed deposits are paid out by banks in a monthly, quarterly or annual periods. These interest rates are paid to your savings account and allow you a source of funds as a regular income. To earn more interest rates on your fixed deposits, choose a compounded fixed deposit option.
Generates a higher interest rate –
A fixed deposit account comes with a much higher interest rate than that of a regular savings account which allows the creation of wealth. The interest rates are levied from fixed deposits starting from 7 days to a period of 10 years. Interest rates on fixed deposits offered by Indian banks range from 7-8% per annum. Longer investment tenure will provide higher interest rates.
Beneficial for emergency funding –
In times of urgent financial distress, a fixed deposit can help in acquiring funds with the possibility of early maturity. A fixed deposit can assist a personal financial problem when you are in need of funds. Also, a fixed deposit can further be helpful as banks allow personal loans on fixed deposits with the loan amount not exceeding 90% of the deposit.
Higher interest rates for senior citizens –
Being a retired pensioner or a senior citizen above the age of 60 without a steady source of income can opt for a fixed deposit scheme as the interest rates are higher for elderly citizens. A fixed deposit account can be opened at different banks and the interest generated could help as a regular income source for senior citizens. Interest rates for senior citizens are as high as 8.7% per annum.
Jointly owned fixed deposits –
A fixed deposit scheme can also be opened jointly with your spouse or children. A fixed deposit gives you a sense of stability in terms of earning regular interest rates and also becoming less worried about the expenses made on a jointly owned account. When applying for a loan against a jointly owned fixed deposit, all the fixed deposit holders will need to provide consent by signing on the application form.
With all these above benefits provided by a fixed deposit scheme, there is one more advantage that can be availed by investors. The strong point being tax benefits, which comes under the section of the Income Tax act. The Tax-saver fixed deposit falls under the exempt-tax category, which is a benefit provided to the investors by the Income Tax Act 1961. Make a smart financial move and act wisely by investing in fixed deposits schemes as they can reduce your tax liabilities. FDs are liquid investments which means you can easily convert them to cash and can be withdrawn whenever needed. So start saving and earning at the same time by investing in fixed deposits.