Fixed Deposits: A Smart Way to Save

In India, there is no investment alternative as common as a fixed deposit (FD). 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 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 in saving, FDs also give several other advantages. Here are some benefits investing in FDs:

Flexible investment period

Most banks now let you to invest in FDs for a period of 7 days to up to 10 years. It makes FDs a perfect option for all of 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, you earn assured returns, unlike most other investment instruments where the returns depend on the market conditions. Having a fixed deposit account 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 fixed deposits.

Tax benefits

There are also tax-saving FDs with an investment duration of 5 years. Under Section 80C, 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.

Liquid asset

Liquid assets can be easily transferred into cash. While FDs charge you penalty for early withdrawal, if you want to invest smart, it's still one of the best options. You can pay a small amount of early withdrawal fee in case of an emergency and use the funds to manage your expenses. FD investors can be ensured with this facility that they will always have a certain quantity of funds to depend on.

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 of FD accounts to borrow loans of up to 90 per cent 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 fixed deposit account.

Fixed Deposits: Reliable, remunerating and simple

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

FDs are one of the simplest and most dependable investment options with the help of which you can earn secured returns and also experience a host of other advantages. If you need to open one, you can do it through mobile banking apps and internet banking.

Sponsor Ads

• Ad Space Available - Rent it Now!

Report this Page

Created on Oct 18th 2019 03:40. Viewed 361 times.

Share on APSense

Comments