Of the multiple investments you can choose from nowadays, Fixed Deposits are one of them.An FD is often considered the most popular investment in India. Consequently, you will find several people investing a significant chunk of their savings in this instrument.
In addition to its popularity, an FD also offers you a host of advantages. However, if you are unaware of these, this guide could offer a better understanding.
About FDs
A Fixed Depositis a Term Deposit offered by various banks. It locks away a sum of money for a specific tenure and lets you earn interest at a fixed rate on the amount.Theseinterest rates are decided at the time of opening the FD. It usually varies across banks and depends on the amount you deposit and the period of investment.
Benefits of FDs
Opening an FD Account offers numerous benefits:
- Ease of investment
Today, you can conveniently use the Banking app to open an FD anywhere and anytime. The process is instant and does not require any physical documents.
- Get a Loan against FD
In the case of an emergency, banks may let you avail yourself of a Loan against your FD at competitive interest rates. Hence, it is a dependable investment option.
- Assured returns
When you opt for an FD, you can enjoy predictable returns on your investment. The returns depend on the FixedDeposit interest rates offered by your bank. You can pick the option that allows you toenjoy interest payouts quarterly, monthly, or annually. Alternatively, you can opt for a reinvestment option that lets you enjoy the advantage of compounding.
- Preserves capital
With a Fixed Deposit, you not only enjoy the benefit of guaranteed returns, but your principal amount also stays protected.
- Easy liquidity
Except for a Tax-Saving FD, banks usually let you withdraw your FDs prematurely by paying a small penalty. Hence, you can easily liquidate your deposits and access your fundsin an emergency.
- Option of flexible tenures
When opening a Fixed Deposit Account, you can choose from multiple tenures offered by your bank. This enables you to pick a duration that matches your investment goals and objectives.
- Good option for saving tax
When you opt for a Tax-Saving FD, you enjoy tax deductions of a maximum of Rs. 1.5 lakh u/s 80C of the Income Tax Act. However, such FDs usually have a five-year lock-in period.
Conclusion
FDs are a widely preferred investment option.Today, you can efficientlyuse theOnline Bankingplatforms offered to open an FDand invest a sum for a fixed period. It is the safest investment in the market. In addition, when you opt for this financial instrument, you can also enjoy the mentioned benefits.
