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Investing in Fixed Deposits- All you need to know
How many times have you compromised on your goals in spite of having a decent salary? On this journey to lead a comfortable life, a number of situations challenge us financially. As soon as we start earning, we somehow start feeling the sense of responsibility towards our families and loved ones.
How many times have you compromised on your goals in spite of having a decent salary? On this journey to lead a comfortable life, a number of situations challenge us financially. As soon as we start earning, we somehow start feeling the sense of responsibility towards our families and loved ones. Be it a long list of pending debts or a dream trip to Europe, the common man with a nominal monthly salary is caught in the trap of never ending expenses. However, this situation can be tackled efficiently if proper planning is done at the right time. One of the most common and reliable methods to do that is Investment.
Now when it comes to investment, there are a number of options you will come across. Some of the very common investment schemes are:
- Fixed Deposits (FDs)
- Stocks
- Bonds
- Mutual funds
- Real estate investments
- Commodity investments
One of the major things to keep in mind before choosing any investment option is your expectations. What are you investing for? Is it a short-term goal or a long term goal? Moreover, each investment is related to returns and risks. One should be aware of the returns an investment can provide as well as the risk they require to take.
If you are a beginner or have a less risk tolerance, you should think about more assured and safe investment options like Fixed Deposits. However, if you want quick returns and are willing to take some risk, you can think of investing in stocks and funds.
Let us talk about one of the safest and best options to invest into- Fixed Deposits
What is a Fixed Deposit (FD)?
A Fixed deposit is a type of investment in which the investor deposits a certain amount of money for a certain period in a bank or a company. Through such an investment, the lender can earn money based on the interest rate offered on the deposited amount.
If you are planning to invest in an FD, you should keep following things in mind:
Important things related to Fixed Deposit Investment:
- Who issues Fixed Deposits?If you want to invest in fixed deposits, you can approach any bank, Non-Banking Financial Companies (NBFCs), Corporate Companies or a Post-Office.
- FD Plans: Issuers offer two plans for fixed deposit investment. These are:
- Traditional Plan: Under this plan, the principal is invested for the chosen tenor, and you can pay the interest on the monthly, quarterly or annual basis.
- Reinvestment Plan: Under this plan, the principal is reinvested with the interest that is compounded on a quarterly basis. At the end of the maturity duration, the accumulated amount is paid off to the investor.
- FD interest rates: Fixed deposit investment is related to fixed interest rates depending on the tenure. NBFCs like Bajaj Finance offers attractive FD interest rates.
- Amount: The minimum limit of FD amount is between INR 1000-10,000. However, there is no upper limit.
- Tenure: Varies across different financial companies. Can be between 7 days-20 years.
- Taxation: The interest earned on fixed deposit investment is tax deductible.
- Loan provision: Fixed deposit investment provides the investor with an option to avail loan against the deposit.
- Premature withdrawal: In case of any emergency or need of cash, you can withdraw the deposited amount before the tenure by paying a small amount of penalty fees.
While applying for a Fixed Deposit investment, it is advisable to use an FD calculator. Fixed deposit calculator helps you decide how much to invest by analysing the interest rates and knowing about the maturity amount you can get at the end of the tenure. Some NBFC websites like Bajaj Finance offer this online tool which helps you plan your investment smartly. So make your move towards investing for a better future.
