Gaining financial independence requires investing money. When you retire, it’s possible that you won’t have an active income to rely on; therefore, you’ll need a big corpus to handle your needs. One can choose from a variety of investment opportunities to increase their money.
Those who prefer a low level of risk frequently choose fixed deposits (FDs) because market-linked instruments carry risk. Senior citizens can rely on FDs because senior citizens fixed deposit rates are higher than normal FD rates, and they come with several extra benefits.
Fixed deposits are a well-established investment option for the safety and security they provide.
What is a fixed deposit?
One of the many investment opportunities you have access to is a fixed deposit. Banks and non-banking financial institutions (NBFCs) like Bajaj Finserv provide fixed deposits. You can invest a predetermined amount in an FD for a particular amount of time and at a specific interest rate. The terms set forth by each financial institution may affect the interest rate of a fixed deposit. You can select fixed deposits with terms ranging from one week to as long as ten years.
Advantages of investing in fixed deposits:
Here are six explanations for why you ought to think about making an investment in a fixed deposit:
Guaranteed returns- A fixed deposit is not impacted by market volatility, unlike investments that are linked to the market, like equities. This indicates that the FD interest rates are steady and won’t change over the course of the loan. It is simple to set your financial objectives because the returns you will receive once the fixed deposit matures are guaranteed. This is one of the most important benefits of a fixed deposit.
Flexibility to withdraw funds- Some investment products, such as tax-saving deposits, do not allow investors to withdraw money during the middle of the lock-in period. A fixed deposit, however, offers lots of flexibility in this area. You can access your money in case of an emergency before your fixed deposit matures. Financial institutions may impose some small fees on early withdrawals, but the money is still easily accessible in times of financial emergency.
Achieve your short-term goals- A fixed deposit is thought to be the best option for short-term financial objectives. This is because it protects your money while actively producing interest on the amount deposited. Many people use fixed deposit investments to meet short-term objectives like buying a car, saving money for a trip, purchasing an electrical device, etc.
Easy to invest- Making an FD account is simple, quick, and easy compared to other investment options. Making an FD is simple, quick, and easy compared to other investment options. You just need to provide minimal documentation if you start an FD at the same financial institution where you already have a savings account. These FDs are also connected to your savings account. This connection makes it simple to invest any extra money in fixed deposits from your savings account.
Interest rates- Senior citizens can benefit from this investment option as senior citizens fixed deposit rates are higher than the normal FD rates.
Loan against FD- Investors in fixed deposit products can also benefit from this. You can always ask for a loan against your fixed deposit if you have one. Different loan amounts are available depending on the financial institution. But you can obtain immediate funds without affecting your FD. For instance, you can borrow up to 90% of your deposit amount. You must consider this aspect when you want to know the benefits of a fixed deposit.
What kinds of fixed deposits are there?
The many fixed deposit kinds available for investment are as follows:
Cumulative fixed deposits.
Non-cumulative fixed deposits.
Flexi fixed deposits.
Tax-saving fixed deposits.
Senior citizen fixed deposits.
One of the safest and most secure types of investment is a fixed deposit. It offers respectable returns and freedom in terms of how much money can be withdrawn. This makes it a fantastic choice for anybody looking for a secure place to deposit their money while still earning interest on it.