Five Advantages of Having an FD account in 2020

by Sanjana Mehta Insurance Advisor
As you may well know, a fixed deposit, popularly called as FD, is a predetermined deposit made in a bank at a predetermined tenure for a fixed rate of interest. They have been a very popular investment option for generations, from retired personnel to first time entrants into the job market. Whether you are a seasoned investor or a first-time saver, an FD will not let you down.

Here are five advantages to having an FD especially in the year 2020:

Senior citizens get higher interest rates:
For senior citizens, especially those who have got a lumpsum amount as their retirement benefit, there could be nothing better than an FD to give them assured returns while also protecting the capital for later use. For senior citizens it is especially better because they get higher rates of interest. So if you have a large amount as your life savings or as gratuity from your place of employment, investing it in an FD will give you a good rate of interest, regular income, and safeguard your capital so that you can even withdraw from it at a later date or even take a loan against it if you ever require it in future.

Guaranteed returns:
Fixed deposits guarantee a fixed amount as returns no matter what the market conditions may be. Even if your interest rates do not increase, they do not decrease either. You can be assured of getting the exact interest as was fixed on the date that you opened your FD. This not only gives you peace of mind but also ensures that you know exactly how much you can get without any unpleasant surprises later on.

More profit:
Irrespective of whether you are a senior citizen, FDs do offer higher rate of returns than a savings account. The longer the tenure of your FD, the higher your interest will be. The interest rates fixed by the banks are dependent on the repo rate fixed by the Reserve Bank of India. Even if the repo rate changes, banks may not lower the interest rates on FDs as much as they would lower the interest rates on loans (as affected by the repo rates) because they want to retain their FD customers.

Interest payment in multiple modes:
With an FD, you have various options of interest payment available which is suitable to your lifestyle requirements. For example, you can choose to get your interest payments monthly, every three months, or yearly. There is also the option of having a cumulative FD which means that the interest keeps getting added into the FD, thus increasing the capital and giving you even higher returns than if you were to take the interest payout. Whichever way you choose, you can be assured of having a regular income from the interest payouts. Whether you are a retired person, a housewife, student, entrepreneur, or salaried individual, having a regular income like this is indeed a boon.

Loan against your FD:
If you have an FD and have an emergency in life or some other expense that you cannot pay out of pocket and need to take a loan for, there is no need to go through the entire process of taking out a personal loan when you can take a loan against your own FD. This is much easier and has several advantages over taking a personal loan. For example, you keep earning interest on whatever amount is still left in your account after you have taken the loan. This regular interest can even be used to pay back the loan. You can take out up to 90% of the FD amount as a loan, so your 10% remains safeguarded and continues to earn you interest in the long run. What could be better?

An FD is an excellent way to save money and watch your money grow at the same time. It comes in handy for emergency cash crunch situations as well as for providing a regular income when you need it the most. It also gives you more peace of mind in the long run which is a big deal in the end.

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About Sanjana Mehta Advanced   Insurance Advisor

48 connections, 0 recommendations, 132 honor points.
Joined APSense since, November 7th, 2016, From Bangalore, India.

Created on Nov 6th 2019 05:38. Viewed 323 times.


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