A fixed deposit is an investment option that comes with a specific lock-in period yielding guaranteed returns at a high interest rate. When you invest in an FD, you invest a lump sum amount for a fixed tenor. A fixed deposit interest rate is generally higher than other types of saving schemes.
There are several reasons why FDs are one of the best low-risk investment options. Let’s take a look at some of them.
- Low risk – Fixed deposit is a risk-free investment option. Your money propagates at a steady rate during the investment tenor. Also, it provides a guaranteed return because of the nature of the investment. Together, it makes FDs one of the best investment options in India.
- Fixed interest rates – The interest rate on your FD is determined when you open the account, and stays fixed during the investment tenor. You can earn an attractive interest rate of up to 8.75% that will help you accumulate more wealth over time. Some financial institutions even offer additional (up to 0.35%) interest rate on FD for senior citizens. They can create wealth significantly by utilising this advantage.
- Flexible tenor – Most financial institutions offer a flexible tenor of 12 to 60 months. You can choose your tenor according to your monetary requirements. It helps maximise your returns and increase your cash inflow.
- A smaller amount for depositing – Another reason why fixed deposits are considered as one of the best investment options in India is because an FD can be opened with even Rs. 25,000. This allows you to invest in an FD whenever the interest rate is at its highest without any worries about collecting a larger corpus. The principal invested is fully secure with guaranteed returns.
- Loan against FD – Many financial institutions allow you to take an advance against your FD for tackling financial emergencies without liquidating your investment. It is a form of secured loan where the invested amount is pledged as collateral. Companies like Bajaj Finserv offer loans of up to 75% if you have a cumulative FD, and up to 60% if you have a non-cumulative FD.
At times when you require a larger amount of sum, you can opt for a Personal Loan from the lender. Bajaj Finserv provides pre-approved offers for personal loans, home loans, business loans, and a range of other financial products. Such offer helps you save time by simplifying the process of receiving finance. You only have to provide some necessary details online to check your pre-approved offer.
- Online account management – Various financial institutions offer online account management and application process that makes tracking your investment easier and streamlined. Online application process helps you save time as it eliminates the need for lengthy paperwork or to visit the institution to open the deposit. You can even calculate your returns with an online fixed deposit calculator. It gives you a clear idea of your investment so that you can plan your finances accordingly.
Benefits of choosing a Fixed Deposit
FDs are one of the best investment options if you are looking for a high-yielding yet guaranteed investment scheme. Both ICRA and CRISIL back it, making it ideal for someone who wants to finance post-retirement expenses, balance a high-risk portfolio, or looking for long-term financial growth. The compounded interest gained over the invested amount allows your fund to grow steadily over time.
Independence from market fluctuations, ease of application, various online tools like FD calculator to determine a suitable tenor and the maturity amount, and guaranteed returns make it one of the best low-risk investment options in India.