Looking for a long-term investment option? Need not worry; FDs (fixed deposits) will help you plan your financially independent future. Fixed deposits are one of the most preferred and safest investment options available for those who are into mutual funds and equity. They make sure you get to fulfil all your goals aspired for different stages of your life by allowing you to manage your financial risks. Be it your child’s future, your retirement plan, or an unforeseen expense you need to care for. Fixed deposits are a smart way of collecting a tight saving for a financially secure future.
Investment in fixed deposit is the first preference of a lot of people. It can help you when the time comes. But here are the seven things you need to know about FDs to make the right investment decision.
Choose a scheme- Companies offer different FD schemes that pay interest based on your choice, whether cumulative or non-cumulative. If you are looking for a regular monthly, quarterly or annual income, you can choose non-cumulative schemes. But if you want to save and earn the returns over a long period of time, you can opt for cumulative schemes. In simple terms, the accumulated interest and principal is paid on maturity.
Interest Rate- The rate of interest remains fixed for the entire tenure, and it is not affected by the market conditions. Typically, you can earn at the rate of 5.50% p.a. To know how much interest earnings, you can earn through your FD investment, you can check it out on FD calculator, available online.
Minimum Deposit- Different companies have different minimum and maximum deposit amounts when investing in FDs. Ensure you get in touch with your preferred company before choosing an institution and find out all about their minimum and maximum deposit amount.
Tenure- Corporates usually offer a tenure starting from 7 days to 10 years. Choose your tenure depending on your plan. It is essential to think about it before choosing a tenure because premature closure of your FD can result in a penalty that will eventually reduce the total interest you earned on your deposit.
Security- Fixed Deposits are a secure form of investment type that offer ensured returns. Credit rating agencies rate the fixed deposits by HFCs and corporates for the convenience of the investors. So, choosing a company wisely is essential.
Nomination- Do not leave the nomination section in your FD blank. Even if you are a sole depositor, you must choose a nominee that will get the amount you collect in FD if you are deceased. The nominee can claim the entire amount with its interest when the death of the depositor takes place.
TDS-TDS or Tax Deducted at Source will be applicable if the interest received or likely to be received exceeds Rs. 10,000 during a financial year.
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Nisha Scott Joined: May 15th, 2020 Articles Posted: 7
