Fixed Deposit

Fixed Deposit Investment

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Fixed deposits are one of the safest financial investments that an Indian citizen can make. A Fixed Deposit (FD) is the most stable investment option in today’s investment market. As the interest rates do not fluctuate based on market and economic conditions, an FD is better than mutual funds, stocks and other investments.

There are mainly two types of modes of receiving the interest. One is cumulative option where the interest is compounded on a quarterly, paid on the maturity of the FD/ autorenewed. The other is a non-cumulative option which is paid in the form of monthly interest or quarterly or on maturity

In a Fixed Deposit, the sum of money is blocked for the period of the deposit. Banks allow depositors the flexibility to invest their funds from periods as low as 7 days to 10 years. The interest rate on the deposit depends on the period for which the funds are placed with the bank.

Why To Invest In Fixed Deposit ?

Fixed Deposits also termed as Term Deposits or Time Deposits. The interest rates for Fixed Deposits remain same throughout the deposit tenure. At the time of Fixed Deposit withdrawal, you need to submit Fixed Deposit receipt. In case, you need money urgently, instead of withdrawing the Fixed Deposits, you can go for Loan against Fixed Deposit. The loan against FD interest rate is only 1% or 2% higher than the regular Fixed Deposit rate of interest.

Different Types of Fixed Deposits:

Standard Fixed Deposits, Special Fixed Deposits, Flexi Fixed Deposits, Tax Saver Fixed Deposits, Cumulative Fixed Deposits, Non-Cumulative Fixed Deposits

Benefits of Fixed Deposit :

Safe Mode of Investment
Tax Benefits on 5 years FD
Fixed Returns
Overdraft Facility
Credit Card Against FD
Loans Against FD
Premature Withdrawal Allowed
Flexibility

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Fixed Deposit Investments

Investing in an FD is perhaps the most common financial advice given in our country. This is maybe because FDs offer a fixed rate of return and are viewed as a superb option to save and grow your wealth.

The promise of a fixed return is surely lucrative. However, it is perhaps not enough to make FDs the most preferred mode of investment in our economy. Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits.

As mentioned earlier, 5 Year Fixed Deposits can be claimed for tax deductions under Section 80C of Income Tax Act, 1961 for an amount up to Rs. 1,50,000 by investors.