Presently, you have various options to save your money and let your money grow over the period of time. The most trusted way for investing and growing your money is investing it in fixed deposits. Those who don’t want to take risk with their money and looking for a constant and static growth in their investments can choose this option. Those who can take risk with their deposits and want to grow their money on fast pace, choose for different options to grow their money. Fixed deposit is a financial tool where investor deposit a certain amount with a bank or financial firm for a period of time. These banks and financial firms pay you interest on deposited amount. You deposit the amount for a minimum or maximum duration as per your financial goals. Fixed Deposit interest rates, maximum and minimum duration may vary from bank to bank. Most of the people prefer to open fixed deposits due to lower risk factor with this investment. You can easily open the fixed deposit account with any bank by depositing the minimum documents.
Here are some important points and advantages related to fixed deposit:
Assured returns: If you have invested money in stock market or commodity market, there are always a risk factor linked with your investments. It might be you will get higher returns and there are equally strong chances that you will get lower returns on your invested money. But, fixed deposits are not risky investment, here you will get assured returns on your investment. Fixed deposits don’t depend on market fluctuations. Here, investors are sure that they will get a fixed return on their invested money at the end of the tenure irrespective from market fluctuations.
Easy withdrawal: If you are in need of urgent money or you have some financial emergency, in such situations you can easily withdraw your money from the fixed deposit account. You can withdraw the money after getting penalty deducted from the whole amount. It is far better than mortgage your property or taking a gold loan to meet your financial emergency. You can withdraw your fixed deposit any time before the completion of the tenure by losing a certain percentage of rate of interest on the total amount fixed.
Different tenure: Fixed deposits are available for different tenure. You can choose a tenure as per your financial goals. You can choose it minimum for one week or maximum for 10 years or more as per your financial needs and whatever suits you most. If you want to avail the tax benefits on your fixed deposit you can go for 5 years or above term. If you are looking for good returns you can go for longer term with higher rate of interest. You can choose the tenure as per your financial requirement.
Encourages saving habits: You can start saving your money in fixed deposit with minimum Rs. 100. There is no maximum limit for depositing your money in FD. You can save the amount as per your money flow and requirements. You can get good and assured returns on your fixed deposits. It is always good to watch your money growing and it encourages you to investment more money to get higher assured returns on investment.
Tax benefits: These fixed deposits also provide you tax benefits. If you want to save tax and want assured returns on your investments then investing money in fixed deposit is the best option. To avail tax benefits you are required to fix your money for at least five years under the tax benefit fixed deposit scheme. You can claim the tax benefits under Section 80C on fixed deposits. The maximum amount allowed for deduction is Rs. 1.50 lakh per annum, however there is no upper limit to save the money in fixed deposits. But, if you withdraw the money before the maturity then you are not eligible to claim the tax benefits for the same. To know more about the tax benefits read 5 Years Fixed Deposits: Tax Benefits & Higher Returns
Higher returns on investment: You will get higher returns on your investments. In a saving account you will get 5% to 6% of interest on the amount, where as here you will get higher rate of interest as compared to saving account. It is one of the safest way of saving and growing your funds.
Loan against fixed deposits: Fixed deposits also help you in getting the loan. Banks also provide the facility of overdraft on the fixed amount if you want money. They provide overdraft loan rather than breaking your fixed deposit before maturity. This is one of the best option to avail a loan for those who are looking for lower rate of interest compared to personal loan, where you are supposed to pay 14% to 30% of interest rate on loan.