A fixed deposit is a great investment option because of the safety and stability it offers. For years, fixed deposits have been the preferred investment option for many Indians. Any person from any walk of life can invest in a fixed deposit. Take a look at this article to know why the Fixed Deposit remains a popular saving option for so many people and also how you can gain by opening an FD
Here are some reasons that make an FD an excellent investment option:
1) Safety
The most significant advantage of investing in a fixed deposit is the safety component. FDs do not rely on the financial markets to perform. They are invested in safe financial instruments such as cash bonds. As a result, you have practically no fear of losing your hard-earned money during market fluctuations.
2) Guaranteed returns
The issuer offers a fixed interest rate on these investments. The interest rate remains constant throughout the tenure of the fixed deposit, and you earn guaranteed returns. A fixed deposit is, therefore, better than leaving your money sitting idle in a savings bank account. You can lock it in an FD and earn dividends at a higher rate of interest, as compared to the bank account.
3) Flexible tenure –
A fixed deposit can be as short as 7 days or as long as 10 years. You can open multiple fixed deposits in the same bank of various durations. You can also opt for an auto-renewal of the FD once it matures. This brings you the benefit of compounded interest. You can also have the interest paid out to you if you so wish. These flexible options make a fixed deposit very handy indeed.
4) Ease of access –
These days, the issuers offer a lot of convenience to investors who look to open an FD. A fixed deposit can be opened instantly through the bank’s mobile app or website. Similarly, the investor can open multiple FDs with a single check. These benefits make the fixed deposits very user-friendly.
5) Higher interest rates for senior citizens –
Senior citizens have limited finances and need reliable ways to invest in. A fixed deposit is a perfect option for a senior citizen looking for a safe investment option. Seniors earn a higher rate of interest on most FDs, making it very profitable for them. Even the interest earned by them is exempted to Rs 50,000 per annum U/S 80TTB across all deposits.
6) The option of a loan –
You can get a loan against the fixed deposit if you ever need one. Premature withdrawals from a fixed deposit often lead to penalties, so the loan option is always a better one. You can get up to 75% of the fixed deposit amount as a loan. The repayment terms are quite relaxed, and the rate of interest is very low, making this a great loan option.
These are the main reasons that make a fixed deposit so trustworthy and popular. Open a fixed deposit today if you haven’t done so. Every bank and some of the leading NBFCs offer fixed deposits to their customers, so you will never find a shortage of options.
