Why Should You Choose FD Investments?

Why Should You Choose FD Investments?

The term fixed deposit is used when you deposit your money for a fixed period of time, which helps you to earn interest at a pre-decided rate in return. The return you get from an FD is more than the return you would get from a savings account. Hence, when your FD matures, you would effectively earn more money than you would have earned if you had just left your money lying in a savings account for the same period of time. For starting an FD, you don’t need to open another account. You can start saving your money by freezing it in a fixed deposit within the same account. Fixed deposits are known for being extremely safe investments.

The only difference between a fixed deposit and a recurring deposit is that you cannot withdraw your money from a fixed deposit before its maturity period gets over, without incurring penalties. If you choose to do so, you will not get the pre-determined rate of interest and you might have to pay some penalty charges.

Benefits of Having a Fixed Deposit Account:

  1. It helps you develop a habit of saving money as you cannot use that money for a fixed period of time.
  2. If you invest your money in an FD, you will get a higher rate of interest on FD investment.
  3. FD is known as a safe investment as you will get assured returns at maturity.
  4. Starting a fixed deposit is something which can be helpful in your near future, as well as your long term plans.
  5. Under fixed deposits, you get the option to redeem your interest when you want. It can be quarterly, monthly or annually, depending upon your choice.
  6. You can choose how long to hold your money in a fixed deposit. The tenure of an FD is quite flexible, ranging from 30 days to 10 years.
  7. You can also go for more than one FD, in order to save and redeem money at different times, to account for both sudden and planned financial requirements.

Why should Opt for a Fixed Deposit?

Fixed deposit is one of the best schemes for those who want to earn more money on their savings. Fixed deposits are secure investments, with assured returns at maturity. They allow you to earn, save, and withdraw your money as per your needs.

Banks provide special facilities to senior citizens who wish to open an FD. Senior citizens can get a higher rate of interest at the time of maturity. The interest rate that they get is usually 0.5% more than people who are not senior citizens. This turns out to be of great help to the senior citizens, as they can secure sustainability for the next 10-15 years.

Another USP of FDs is the overdraft facility offered by many financial institutions. Under this facility, you can withdraw up to 90% of your fixed deposit without breaking it. In such a case, the interest that you have to pay will be charged only on the part that you have used. This way, you avoid incurring pre-matured penalty charges. The overdraft facility is something which anybody can opt for without breaking their FD.

FD Interest Calculator:

The interest you earn from your fixed deposit depends on the tenure you choose and the amount that you are going to deposit for that fixed tenure. Most banks use an interest calculator to provide transparency to their customers. In most banks, the interest on an FD is compounded on a quarterly basis. Those who want to earn more interest will have to lock their money in an FD for a longer period of time; that way, the return that they will get is automatically higher. If you go for a shorter period of time, then the interest rate will be lower.