In order to achieve long-term goals, investing your hard-earned money in the right manner is very important in the current times. It helps you to potentially grow your wealth and achieve goals in a much more quick manner.
In India, when it comes to investment, the first and foremost thing that comes into everyone’s mind is a Fixed Deposit. The prime reason behind it is that it is one of the safest investments in the current era as it offers assured returns. Moreover, unlike other investments, which are volatile in nature, this one is relatively stable in nature, and moreover, the fixed deposit interest rate is quite lucrative in our country.
What is a fixed deposit?
As the term suggests, it is a financial instrument offered by banks/financial institutions that allows an investor to deposit a lump sum of money for a fixed tenure. This period ranges from one month to several years at a predetermined interest rate. The rate of interest offered in this investment scheme is generally higher than regular savings accounts and is fixed for the deposit’s entire duration.
When the tenure ends, the investor receives their initial investment as well as the accumulated interest. However, for early withdrawals, a minor penalty is involved for not completing the agreed term.
(Tip: Use an fd calculator before investing.)
What are its benefits?
● Lower Risk
FDs are considered low-risk investment instruments as the principal amount here is not impacted by market fluctuations. Therefore, when the tenure ends, the investor is guaranteed to receive the entire principal amount along with interest.
● Tax savings
Fixed Deposits that offer tax benefits are also available. This comes under Section 80C of the Income Tax Act, and here the investors can claim a deduction of up to Rs 1,50,000 on the amount invested.
● Regular income source
For investors who seek a regular income, an FD is a good investment for them. Here, they can opt for interest payout on it, either monthly or quarterly. Moreover, India’s pleasing fixed deposit interest rate pulls many individuals towards it.
● Easy Withdrawal
Investment in fixed deposits allows the investor to withdraw the money before the maturity term. However, early withdrawal means a minor penalty.
FDs are flexible in nature and offer various tenures. Ranging from a few months to several years, the investors can choose the tenure that suits their financial needs.
Well, when it comes to this type of investment, the list of perks goes on and on. Moreover, it is an ideal investment option for individuals who want to earn a fixed return on their savings without taking any risks.
Before investing your hard-earned money, using an FD calculator online is one of the best things one can do. This ultimately helps in achieving the financial goals in the long run and gives you the exact figures of how much you’ll reap out of your investment.