Is It Relevant To Invest In Fixed Deposits?

In India, there is no investment alternative as common as a fixed deposit. Check this article to find out some of FD’s advantages and how it is one of the smart ways to save.

While individuals are now becoming financially conscious and actively seeking investment alternatives, for more than a few months, most individuals are unable to stay invested in their choice of financial investment.

It makes a fixed deposit (FD) one of the best ways of saving funds and earning interest on it. Because FDs require you to stay invested for a set duration and early withdrawals result in a penalty, it helps save money. Besides assisting you to save, however, FDs also give several other advantages. Let us look at some of the benefits of investing in FDs:

Flexible investment period

Most banks now let you invest in an FD for a period of seven days to up to 10 years. It makes FDs a perfect option for all your short-term, medium-term, and even long-term financial goals. The interest rate generally depends on the investment period you chose. Likewise, there are privileged rates for senior citizens to help them get higher returns.

Fixed returns

When you invest in FDs, you earn assured returns, unlike most other investment instruments where the returns depend on the market conditions. Having a bank FD offers you fixed returns irrespective of the investment amount. It is one of the main reasons why expert investors prefer a part of their portfolio invested in.

Tax benefits

There are also tax-saving with an investment duration of five years. Under Section 80C of the Income Tax Act, tax-saving FDs come under the Exempt-Tax-Exempt type. While the interest you earn from your FD investments is taxable, for the amount you invest in these FDs, you can claim a tax deduction of up to INR 1.5 lakh in a financial year.

Borrow loan

Besides being one of the smart ways to save money, FDs also give a host of other advantages. For example, many of the banks now permit holders to borrow loans of up to 90% of their principal and interest amount. If you need a fast loan to handle a financial emergency, this loan can come in handy against the bank fixed deposit.

Fixed Deposits: Reliable, remunerating, and simple

Browse through the various investment products available in India, and you will notice most of them require a considerable amount of knowledge and expertise.

They are one of the simplest and most dependable investment options with the help of which you can earn secured returns and experience a host of other advantages.

You can also open fixed deposit account using mobile banking apps. Most of the banks have these services offered nowadays for swift investments.

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Created on Jul 2nd 2020 06:08. Viewed 359 times.

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