The Safest Way To Invest: Fixed Deposits

by Mahima Bhatnagar

A fixed deposit is the best way to invest. Many of you are interested in saving some bucks. While some of you are thinking about the future. Some have the tension of their retirement and pensions. Some people are thinking of investing their savings in stocks. While others are searching for mutual funds. But if you want to invest without knowledge and investigations. And having a lack of time for investigation.

It is covered under section 80C of Income Tax Act, 1961. As well RBI offers security on our fixed deposits. FDs are safe because each depositor is protected by up to 1 Lakh of Deposit Insurance and Credit Guarantee Corporation (DICGC). FDs are very safe under private and public sector banks.  

Fixed deposits

Fixed deposits can be said as money deposits in the bank account for some fixed period. For Fixed deposits you don’t need an extra bank account, you can use the same bank account for fixed as well saving account. The benefits of FDs are you get a higher percentage of interest than saving accounts.

Also Read- 8 Reasons To Use Credit Cards

Why fixed deposits ?

Fixed deposits not only provide us money safety but also gives some extra as interest. There are certain features which surely would surprise you.

  • High-interest return: In fixed deposits, you get higher returns than the current account. The interest rates vary from 3% to 9% and also varies for different ages of investors. Interest rates also for different periods of investment. Along with the high-interest rates Fixed deposits are safe also. The investor has low chances of losing the principal amount unlike in the case of the share market.
  • Compounding in nature: As for fixed deposits, interest rates are compounding in nature. That means each time the interest rates in given on the money you have after last in your account current time. Due to the above-mentioned reason the interest rates increases. Like in case, if you invest in Pnb housing then for 1 year your Rate of interest will be around 8% for the first one year. Whereas in the case of Shreeram it will be around 7.95%. but if you lock in your investment for 60 months then you will get the best return and the interest rates increase up to 8.15% and 8.88% respectively for both cases.
  • Guarantee interest on your investment: In fixed deposits, you don’t have to think about the principal. Each time your principal increases. That ensures interest on your investment. Every time the safety o the interest along with the Principal amount is ensured by CRISIL it gives the highest safety rating which is FAAA\STABLE. Like the PNB housing has got the highest safety rating by CRISIL. Similarly for other also CRISIL provides different safety ratings. The CRISIL FAAA rating is the degree of safety regarding the timely payments of interest.
  • Minimum investment amount: many of the banks have some minimum investment amount described. Yet there is no maximum amount of investment is defined. For the senior citizen, the interest increases on special offer events the investment can be started in a very lesser amount. Like in the case of PNB housing the minimum interest rate is 10000 which shows us that for a very lesser amount of investment we can get more high returns. In FDs, the investment amount is very less compared to the benefits. In another company like Axis bank, the investment amount is as low as 5000 INR. The AU Small Finance Bank is ready to give start FDs at an initial investment of 1000INR only.
  • Loan against fixed deposits: Easy availability of loans are provided under fixed deposits. In this type of loan, rates are about 1 to 2 % higher than FDs interest. Yet this is much lower than other types of loans. Many companies are ready to give loans up to 75% of the total amount available under all the branches.

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