Everybody wishes to have some kind of financial stability in their lives. It can often be challenging to decide where to invest because everybody has their own opinion. However, it’s about educating yourself and then proceeding to make the right decision.
Banks and Financial institutions offer multiple benefits of investing in Fixed Deposits (FD). They are one of the most efficient and risk-free investment options that help to save money and earn assured & attractive interest. In this article, we will learn how investing in FDs can be beneficial.
Advantages of Investing in Fixed Deposits
There are numerous advantages to investing in FDs. No matter what your goal is, with an FD, you can attain it over time. Before you move on with your goal of investing in FDs, check out some of the benefits as follows:
- A good option to achieve your goals safely
Investing in a Fixed Deposit ensures you get a fixed return during maturity. If you have a financial goal to meet after a certain period, an FD can help you achieve it safely without worrying about market up’s & down’s. Critical family goals like your child’s higher education, your dream home down payment can not be subject to market up’s & down’s so for these goals FD is the most trusted & used investment product.
- Reduces any risk on the portfolio
Asset allocation is a prominent way to garner wealth. You can invest in different asset classes, such as gold, fixed income, equity, and more. Each of these assets has a different role when adding them to your portfolio. When you invest in fixed-income products, you get the stability of a fixed return. This helps boost a strong portfolio without any risk of losses over time with an FD investment.
- Complete flexible tenure of investment
You can invest in an FD for seven days to up to a maximum of ten years. You get complete flexibility over the investment tenure. You can choose any period for investing at your convenience. There is no pressure from the bank or any financial institution.
- Liquidity
One of the major benefits of investing in FD is the liquidity that they have to offer. FDs can be liquidated after a certain time to convert them into cash. So, when you need the amount, you can withdraw. However, some penalties may be charged.
- High-Interest Rate
An FD account’s interest rate is higher than savings deposits. Different banks offer different fixed deposit interest rates on investments, and you should speak with a representative to learn how much interest they are offering before deciding which bank to invest in. Banks may offer a minimum interest rate of 4% or as high as 7%. Therefore, consulting with the representatives and researching independently can help you make a smarter choice.
- Safety of returns on maturity
When you invest in something, you always wish to get returns. Isn’t it? However, not every asset you invest in will guarantee you a return. Well, this is slightly different in terms of FDs. When you invest, you’re guaranteed to get FD Returns on your maturity. This will pave the way for safety and guarantee your return. The return you get from FD investment will include the interest you earn on your investment.
- Achieve short-term goals easily
As discussed, there is no fixed tenure for which you can invest in an FD. Since you can invest anywhere from 7 days to 10 years, if you have a shorter goal to achieve, you can easily invest. For example, if you wish to own something within the next six months or a year, you can invest in a shorter FD. The amount will mature at the end of the term, and you will receive it in your account.
- Safe investment
Compared to other forms of investment, an FD is one of the safest investment methods. This is because you will receive a guaranteed return at the end of your term. Moreover, there is no risk in your portfolio either. So, if you’re looking for an investment that does not involve any risk, you can invest and get assured FD Returns.
- Tax Saving: The biggest advantage
When you invest in a tax-saving FD, you are likely to get various benefits under Section 80C of the Income Tax Act, 1961. This section falls under the Exempt-Tax-Exempt category. However, the interest you earn on this kind of FD will be taxable. As a result, you can claim a deduction of around Rs 1.5 lakh depending on the amount you invest.
- Build a relationship with the bank
You will be eligible for various premium services when you have a strong relationship with your bank. Banks are always looking for opportunities to work with individuals with a strong banking history. Having an FD account with that bank can help you build a strong relationship with them. As a result, when you’re looking for loans or any other banking services, you are likely to get a preference.
Conclusion
FDs can offer a wide range of benefits to investors. The ability to open an account with your bank quickly and easily is one of the most noticeable advantages. You can also open your FD account without any help from a representative. Use an online method to open the account, depending on their instructions. So, what are you waiting for? Open an FD account today and enjoy the benefits.