Compelling reasons to invest in Fixed Deposits in 2024
FDs are a viable option for them (as they are guaranteed returns, flexible and available) when it comes to saving money.
- Dec 23, 2024,
- Updated Dec 23, 2024 2:58 PM IST
It is important to have some of your savings lying in safe and risk-free investments in today's world, which changes every now and then. FDs are a viable option for them (as they are guaranteed returns, flexible and available) when it comes to saving money.
Let us discuss some primary reasons you should invest money into FDs.
FDs are safe bets with guaranteed returns: A major advantage of FD investments is the assurance of fixed returns. With fixed deposits, the interest rate remains constant throughout the investment period. In contrast, stocks or mutual funds are market-linked, making them more volatile. FDs provide predictability, allowing you to easily calculate your returns and plan your financial life with confidence.
Multiple payout options: Flexible payout is possible with FDs. Interest can be redeemed either monthly, quarterly or at maturity, depending upon your cash flow requirements. This allows you to keep your investment in sync with your financial goals.
Easy to liquidate: Although FDs are set for maturity holding, most banks offer premature withdrawal for unforeseen financial emergencies. If you want to withdraw your money before the maturity date, you may get out of the deposit but with the deducting penalty. You can expect the penalty to be a percentage of the interest you earned, so your principal amount is not affected.
Loan and Overdraft facilities: By FDs, you can also apply for a loan or Overdraft against your deposit. Most banks provide you with a loan of up to 90% of the deposit amount without closing your FD. This feature gives you liquidity without disturbing your investment process. Banks also allow you to withdraw funds at the rate of your FD, which provides diversification in managing money. Moreover, banks permit you to have an overdraft facility for an amount that can be withdrawn with the value of your FD, so you can be flexible in your numbers.
Flexibility of duration: FDs are provided with a tenure span from the tenure bundle (7 days to 10 years). Generally, most you can select from this flexibility is the time you wish to set aside to match financial goals. Whatever your short-term or long-term investment horizon may be, you will find an FD that fits.
Principal protection: FDs prioritise the safety of your principal amount. Unlike market-linked investments, your invested capital remains secure, regardless of market fluctuations. Additionally, the government supports FDs offered by banks and post offices in India, providing an additional layer of security. Your deposits of up to ₹5 lakh are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
High interest rates: FDs have much higher interest rates than a normal Savings Account. The interest rates on FDs are around 5%-7% p.a. on an average, but this may differ from bank to bank and tenure. Typically, seniors are offered even higher interest rates. Using an FD Calculator, you can calculate the maturity amount based on the amount of investment, tenure, and interest rate and take an advisory yourself.
Conclusion
Most investors consider FDs a safe option since the stock market's daily fluctuation does not influence their performance. Fixed Deposits are good for parking your emergency funds, as the principal is insured in case of default. You need to deposit your FD in a well-reputed bank or financial institution.
It is important to have some of your savings lying in safe and risk-free investments in today's world, which changes every now and then. FDs are a viable option for them (as they are guaranteed returns, flexible and available) when it comes to saving money.
Let us discuss some primary reasons you should invest money into FDs.
FDs are safe bets with guaranteed returns: A major advantage of FD investments is the assurance of fixed returns. With fixed deposits, the interest rate remains constant throughout the investment period. In contrast, stocks or mutual funds are market-linked, making them more volatile. FDs provide predictability, allowing you to easily calculate your returns and plan your financial life with confidence.
Multiple payout options: Flexible payout is possible with FDs. Interest can be redeemed either monthly, quarterly or at maturity, depending upon your cash flow requirements. This allows you to keep your investment in sync with your financial goals.
Easy to liquidate: Although FDs are set for maturity holding, most banks offer premature withdrawal for unforeseen financial emergencies. If you want to withdraw your money before the maturity date, you may get out of the deposit but with the deducting penalty. You can expect the penalty to be a percentage of the interest you earned, so your principal amount is not affected.
Loan and Overdraft facilities: By FDs, you can also apply for a loan or Overdraft against your deposit. Most banks provide you with a loan of up to 90% of the deposit amount without closing your FD. This feature gives you liquidity without disturbing your investment process. Banks also allow you to withdraw funds at the rate of your FD, which provides diversification in managing money. Moreover, banks permit you to have an overdraft facility for an amount that can be withdrawn with the value of your FD, so you can be flexible in your numbers.
Flexibility of duration: FDs are provided with a tenure span from the tenure bundle (7 days to 10 years). Generally, most you can select from this flexibility is the time you wish to set aside to match financial goals. Whatever your short-term or long-term investment horizon may be, you will find an FD that fits.
Principal protection: FDs prioritise the safety of your principal amount. Unlike market-linked investments, your invested capital remains secure, regardless of market fluctuations. Additionally, the government supports FDs offered by banks and post offices in India, providing an additional layer of security. Your deposits of up to ₹5 lakh are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
High interest rates: FDs have much higher interest rates than a normal Savings Account. The interest rates on FDs are around 5%-7% p.a. on an average, but this may differ from bank to bank and tenure. Typically, seniors are offered even higher interest rates. Using an FD Calculator, you can calculate the maturity amount based on the amount of investment, tenure, and interest rate and take an advisory yourself.
Conclusion
Most investors consider FDs a safe option since the stock market's daily fluctuation does not influence their performance. Fixed Deposits are good for parking your emergency funds, as the principal is insured in case of default. You need to deposit your FD in a well-reputed bank or financial institution.