Fixed Deposit (FD) has been one of the most trusted investment options from decades. The FD rates have slightly increased in recent years. Due to this reason, it is essential for you to plan and invest so as to get the maximum returns. If you wish to earn more with higher risks, you might want to invest in market-linked investment options such as direct equity, Public Provident Fund (PPF), debt mutual funds, and so on. However, with secure investment options like fixed deposits, you can avail guaranteed returns from your investment. The FD returns are predetermined and do not alter with market rate fluctuations due to which it is amongst the safest investment options. To open an FD, you should deposit a lump sum amount for a fixed tenor. After the maturity of your investment, you can get your invested amount along with the compounded rate of interest on the same. You can also choose to receive the interest rates at fixed intervals as per the terms and conditions of the financial provider. The FD interest rate is determined on the basis of the principal amount, the tenor of the FD, the type of FD, and the type of customer. Moreover, you can avail tax benefits for investing in an FD as per the Indian Income Tax Act.
Types of FD
Both, banks as well as (NBFCs) Non-Banking Financial Companies offer two types of fixed deposits, they are:
With a cumulative FD, the interest rate is compounded on an annual or a quarterly basis and is paid to you along with the maturity amount. You do not have the option to choose the frequency of the interest payout with a cumulative FD. The accumulated interest rate is added to the FD returns and paid to you at the time of maturity or completion of the tenor.
With a non-cumulative FD, you can choose the frequency of your FD from a monthly, quarterly, half-yearly and yearly payouts. You will receive the FD interest rates pay out at regular intervals. However, experts’ suggest choosing cumulative FD over non-cumulative FD as the FD rates for cumulative fixed deposit is higher than that of non-cumulative fixed deposit.
Things to Consider to Avail the Maximum Returns from your FD
Consider Investing in an NBFC
Earlier, it was believed that banks are the only secure platforms to invest in an FD. With the emergence of prominent NBFCs like Bajaj Finance, you can avail high FD interest rates and guaranteed returns from your investments. Below are some benefits of investing in an FD with Bajaj Finance:
- Assured returns without market rate fluctuations
- Increased FD rates for existing customers as well as senior citizens
- Minimum deposit as low as Rs. 25000
- Flexible tenor extending from 12 months to 60 months
- Option to choose the type of FD
- Facility to select the frequency of interest payout with a non-cumulative FD
- Alternative to ladder investments by opening multiple FD accounts with different tenors at the same time
- High FD interest rates as compared to other financial providers (up to 9.10%)
- Facility to take a loan against FD in case of emergencies with low interest rates as compared to other standard loans
- Great credibility with FAAA and MAAA stable credit rating from CRISIL and ICRA respectively
Look for Online FD Application
With the online procedure of opening an FD account, you can eliminate the majority of the documentation procedure as well as the processing fee. You need to check your eligibility criteria from the website of the chosen financial provider, fill a quick application form, and submit the necessary documents like the KYC. The interest rates offered by financial companies for online application is generally higher than that of offline application. Moreover, you can save your time and apply for an FD from anywhere around the globe, provided you fulfill the eligibility criteria set by your financial company.
Ladder your Investments
It is advisable to ladder your FD investments in case you have a considerable amount for investment. Not only can you maintain liquidity from your investments but also eliminate the risks of premature withdrawals. You need to pay the penalty for making premature withdrawals, and you may lose the benefits of interest rates earned from your investments. In FD laddering, you can open multiple FD accounts at the same time with different tenors.