November 19, 2019

by agnesgaiser239

Initiating an investment in a world of constant fluctuations can be a troublesome task. In such a scenario, Fixed Deposits have been persistently prescribed as the best option. However, with the exponentially increasing investment opportunities like mutual funds, stock market, gold, and real estate, obvious doubts start to appear. The question of whether Fixed Deposit still holds the position as the ‘best option’ arises automatically. Consequently, if we take a microscopic view, Fixed Deposit indeed emerges as a winner due to the dynamic nature of the capital market.

The current Indian economic context shaped by the after-effects of demonetization has ignited a series of recurrent fluctuations. While big-ticket investments have been put on hold, various corporates are still coping up with losses whilst the economy recovers. Previously preferred options like gold, silver, and even real estate have tumbled down in the eyes of investors and have been abridged as an unfavorable option. With the entry of GST and its unavoidable taxation policies, the value of market trends unfurled by several corporates has also stooped down.

Considering the volatile performance of the economy, Fixed Deposits provide the safest investment platform. It is the simplest form of investment that is readily available as well as accessible. Anybody can open an FD account with any bank or NBFC across the country with a simple KYC procedure. Herein you deposit a lump sum amount for a pre-decided fixed tenor and rate of interest. You can choose periodic pay-outs of interest as monthly/quarterly/annually/half-yearly/annually or receive the entire amount at maturity. Interest rates vary across various banks, but you can check your rate of return through online FD calculators and choose accordingly.

Considering the volatile performance of the economy, Fixed Deposits provide the safest investment platform. It is the simplest form of investment that is readily available as well as accessible. Anybody can open an FD account with any bank or NBFC across the country with a simple KYC procedure. Herein you deposit a lump sum amount for a pre-decided fixed tenor and rate of interest. You can choose periodic pay-outs of interest as monthly/quarterly/annually/half-yearly/annually or receive the entire amount at maturity. Interest rates vary across various banks, but you can check your rate of return through online FD calculators and choose accordingly.

Sometimes Fixed Deposits can have a ‘fixed’ lock-in or maturity period ranging from 7 days to 10 years. It is possible to withdraw money during this period but is advised not to due to the applicable penalty on such an action. Precisely, unlike other options, there is a provision to break the deposit, which can be used in the case of urgency.

The taxable nature of interest income makes it even more advantageous. Interest income derived from an FD will be added to your income. Additionally, by filling out 15H or 15G forms, you can avoid TDS, given that you are eligible to open an FD account.

What a lot of people do not realize about an FD is that it gives a provision to have a joint account wherein people can hold that deposit with their spouse, children, partner, or business partner. Similarly, it has a simple nomination procedure available in soft as well as hard copy nowadays.

Every bank, public or private, has special Fixed Deposit schemes for every section of society. Particularly, there are special deposit schemes for senior citizens with high rates. Indeed, the rates offered to senior citizens are generally 0.25% higher than the standard rates offered.

Corporate fixed deposits, for example, are a great investment option for them. These give out safe returns with an alternative of regular income during their retirement years.

In the world of investments, FD is conventionally looked down upon as it has become equivalent to a necessity in many households. It is often encouraged to explore new and emerging options like mutual funds in today’s financial context. While mutual funds have their perks, they cannot outcast the safety an FD imbibes. Additionally, you need to acquire knowledge and skills before investing in entities other than a fixed/recurrent deposit.

In case you are beginning to invest, you should undoubtedly choose a fixed deposit as a primary option. FD’s are live tutorials to inculcate a saving habit amongst beginners. Once an amount of money is deposited for a fixed period ad interest rate, you will not be tempted to spend unnecessary money.

Despite the evolution of the financial market, FD is still considered as an unsurpassed contender. FDs help you to fulfill your life goals whilst managing your financial risks. These goals, which could be a marriage, your child’s future, your future, business venture, or others, can be easily achieved by readily accessible fixed deposits. Whether it is getting necessary funding at short notice, availing a simple nomination facility, or using it as collateral – FD indeed holds the position as the best option.

Despite the evolution of the financial market, FD is still considered as an unsurpassed contender. FDs help you to fulfill your life goals whilst managing your financial risks. These goals, which could be a marriage, your child’s future, your future, business venture, or others, can be easily achieved by readily accessible fixed deposits. Whether it is getting necessary funding at short notice, availing a simple nomination facility, or using it as collateral – FD indeed holds the position as the best option.

Summary:

For a person who is new to the world of investment, there are a lot of options in the market. Whether one should invest in bonds, shares, gold, or fixed deposit, is the dilemma that is faced by many. With the onslaught of demonetization and GST, the present condition of the precious metal market is not that stable. The same can be said about shares and bonds.

However, there is much more stability in the area of fixed deposits and will always be. In fixed deposits, one deposits a principal amount to receive a particular rate of interest on that, after a period of time (called the maturity period), which can be monthly, quarterly, half-yearly, or yearly. However, if one withdraws the money before the maturity period, one has to give away a part of the interest. The interest rate varies across all platforms. Thus, one should compare the rates to get the best deal.

An advantage of FDs is that FD can be used as collateral to take loans from the same bank. One should, however, keep in mind that the interest income received on FDs are not tax-free. So, while filing tax papers, one should enlist this as income as well. Thus, overall, we can say that a fixed deposit is a profitable investment.

Leave a comment

Your email address will not be published. Required fields are marked *