Are you looking to invest your extra earnings for the long-term with minimum risk? Consider investing in fixed deposits. A popular investment option in India, a fixed deposit can increase your investment with good interest for the long term. We’re sure the elders in your family have advised you to invest in FDs as there are several benefits of FD account. Here are our top reasons to invest in fixed deposits:
Your investment is protected:
Unlike mutual funds or stock market investments, there are no risks attached to fixed deposits. A fixed deposit is probably the most secure financial investment you can make since the principal amount is guaranteed. When your FD matures, you will get the principal amount as well as the interest earned as per the fixed deposit interest rates during the tenure of your deposit.
Brings assured returns:
Fixed deposits are great when you want fixed and assured returns. When you deposit your money into a fixed deposit with a bank or an NBFC, you get an accurate idea of the returns you will get when the deposit matures. Once you lock into the deposit, the lender is liable to pay you on maturity the returns as per the fixed deposit interest rates agreed upon at the beginning of the tenure. Fixed deposit interest rates are higher in comparison to those offered on savings accounts. Thus, investing in a fixed deposit is a lucrative option for helping your money grow. Keep in mind that fixed deposit interest rates vary as per the tenure of your deposit.
Comes with a variety of tenure options:
When it comes to FDs, you can choose a tenure as per your liking. Lenders such as Bajaj Finance, offer FD tenures ranging from 12 to 60 months. When selecting the fixed deposit tenure, make sure you take into account your financial needs and goals. Many banks offer the highest fixed deposit interest rates for deposits with a duration of a year.
Is easy to redeem:
If you are in need of funds, you have the option to break your fixed deposit before maturity. However, while it is easy to redeem your fixed deposit, such a move prior to maturity will attract a penalty. This penalty could be 50 to 100 basis points lower in comparison to the contracted fixed deposit interest rate.
Can be used as collateral:
Are you looking to apply for a secured loan? You can pledge your fixed deposit as collateral. Lenders may lend you up to 90% of the fixed deposit amount. Secured loans have lower interest rates compared to unsecured loans. And since the loan is offered in the form of an overdraft, your fixed deposit will continue to earn you interest. A fixed deposit can also make things easier for you when you apply for a credit card. Some credit cards secured by FDs can bring you considerably lower interest rates.
Not affected by markets:
Fixed deposit interest rates are not affected by market rate fluctuations. Whether there is a fall or decline in the rate, your deposit will continue to earn returns at the fixed deposit interest rate offered by the lender till the end of the tenure. Thus, a fall in the fixed deposit interest rates before maturity of your deposit will not lower your returns. Similarly, a hike in the fixed deposit interest rates before maturity will not increase your returns.
Can financially secure your retirement:
A fixed deposit can be a good option for senior citizens to invest money and earn better returns. If you are more than 60 years old, then you may qualify for higher fixed deposit interest rates. For example, Bajaj Finance offers returns at an additional 0.25% interest rate above the prescribed fixed deposit interest rates.
Bajaj Finance offers fixed deposit interest rates of 8.05% with an additional interest for senior citizens. Start your investment with just Rs.25,000!