Planning to invest in Fixed Deposits? Learn more.
Investing avenues for modern investors are plenty, you have mutual funds, government schemes and more. But people want something guaranteed; the option to invest in Fixed Deposits meets this requirement. To make an informed decision about investment in FD read the article below.
Benefits of FD
Fixed Deposits are known as one of the most secure and safe investment options because they have a fixed interest rate that does not get affected by market conditions. It makes them a stable and reliable investment option for many.
Guaranteed interest rates
FD holders are entitled to receive a fixed interest rate on the deposited amount. Many banks also provide an online calculator that helps investors calculate the amount of interest. These calculators will let you know how much you earn after maturity. This way, you get assistance and can make an informed choice.
To invest in a Fixed Deposit, just go to the bank’s website and open an FD account online. Through net banking facilities, you no longer need to visit the branch office to open an FD account. Just fill in the below details in the online form to open an FD account online:
- Mobile Number
- Email ID
When you submit the details mentioned above, you’ll get an OTP on your mobile, enter the same to confirm your details. Now choose the amount you want to deposit and the tenure for which you want to keep the deposit.
FDs have a variety of tenure options that investors can select from. But usually, it ranges from seven days to 10 years. The longer the tenure, the more interest will be on your deposit amount.
Tax-saving FD is a type of Fixed Deposit that helps investors get a tax exemption of a maximum of Rs. 1.5 Lakh. This tax saving FD comes with a lock-in period of five years, so you can’t withdraw the deposit amount in the meantime.
Easy to liquidate
Another notable benefit of investing in a Fixed Deposit is that it offers the necessary liquidity that other financial products cannot. You can easily talk to the financial institution and liquidate your investment using the partial withdrawal facility. And if you opt for this, you may have to bear a small penalty charge, which varies across banks.
It can be used as collateral
When you invest in a Fixed Deposit, it becomes your asset. And in case of a financial need you can use it as collateral to take loans. Because the loan is secured, it will come with an affordable interest rate that will also help you repay the debt quickly.
The additional interest rate for senior citizens
The senior citizens of the country, i.e., Individuals above 60 or those above 55 with early retirement, can also greatly benefit from an FD. The reason being the senior citizen interest rate on an FD is 0.5% to 1% higher compared to the standard rate.
Documents required for opening an FD
Now that you know the benefits of investing in an FD, you also need to know the documents you need to keep handy to invest in it easily. The following documents are required in order to open a Fixed Deposit account:
- Photocopy of your identity proof that is government-issued, like a PAN card, Aadhaar card, Voter ID card, passport etc.
- A duly filled and signed application form and a passport-sized photograph
- Telephone or electricity bill as proof of residence
Fixed Deposits have become an extremely popular choice for investors who are trying to save their money. Locking it up in an FD is a good deal as over time it’ll get you a higher return. FD is a safe and secure investment option that is specifically suited to risk-averse depositors. So if you have plans to invest in a Fixed Deposit, being aware of the pointers mentioned above will help you make the right decision.