A latest report by The Economic Times shows that the share of fixed deposits stood at 58.2% in March 2018. Whereas, the share of current and savings account were at 9.7% and 32.1%, respectively.
The total deposited amount in financial institutions reached Rs.117 lakh crore in March 2018. This extensive amount of investment in fixed deposits supports the fact that these are indeed beneficial products for investment.
Financial companies offer lucrative rate of interest for the term deposits based on the category of candidates. For example, NRI FD interest rates are different from that offered to senior citizens. Financial companies decide on the rate of interest depending on a few factors like –
- Category of applicant.
- Tenor of deposit.
- Type of fixed deposit.
Consumers willing to invest in fixed deposit schemes must evaluate the benefits coupled with it firstly to ensure they are choosing the best investment option.
Following are some of the benefits users can avail by investing in a fixed deposit –
- Assured returns on investment
FD is a secured mode of investment and hence provides consumers with assured returns on investment. The interest offered by the financial companies is unaffected and is free of market risk especially for long tenor investment. Therefore, consumers can invest their money and be assured of the returns.
- Higher returns on investment
As compared to the savings account, fixed deposits offer a higher rate of interest. Few reputed financial companies like Bajaj Finance offer NRI FD interest rates of up to 8.10% compounded periodically.
- Flexibility to choose the mode of interest payment
Individuals who deposit money can choose the type of fixed deposit they wish to invest in. Those wishing to receive interest-payout at the end of tenor can choose cumulative FD, whereas non-cumulative fixed deposits allow investors to choose from monthly, quarterly, or annual interest-payout option.
Individuals can make use of a fixed deposit calculator and know about the maturity amount and interest-payout as chosen.
- Special rate of interest for senior citizens
This is one of the top investment schemes for senior citizens that ensure stability as they can invest without exposing the funds to any potential risk. In addition to assured returns, they can deposit funds at an offered rate of interest up to 8.35%.
- Option for loan against fixed deposits
Consumers that need access to funds and do not want premature withdrawal of fixed deposits can make use of this facility. Financial companies let users opt for a loan against the fixed deposit scheme they have invested in.
- Option for joint fixed deposits
Customers are provided with the option to opt for joint fixed deposits, which provides access to all the investors.
- Easy to liquidate funds for emergency situations
Even though premature withdrawal of fixed deposits isn’t advisable, accountholders might need to liquidate funds at a point in time if they meet with a financial crunch or emergency.
Fixed deposits extend this facility of premature withdrawal so that individuals can have access to funds within a short span. Investors must know how premature withdrawal of fixed deposits affects their interest calculation so that they can make informed decisions regarding it.
- Flexibility of tenor
Individuals choosing FD as an investment option can choose from a diverse range of tenor. This flexibility in the selection of the lock-in makes the investment more feasible and beneficial. Even though candidates have multiple options for tenor, choosing a long tenor for term deposit can fetch you higher rate of interest.
Subsequently, investors can avail these benefits as offered by financial company for the fixed deposit products. Even non-resident Indians can qualify for such benefits and invest their savings in term deposits that offer lucrative NRI FD interest rates. Besides, making sure of the interest-payout calculation and maturity amount can further aid in one’s investment experience.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends.