17 Aug Why Should You Invest Your Funds In A Fixed Deposit?
In case if you are planning to earn high returns, then investing is always a good idea. Investments help to replicate your funds, which is why most people prefer investments over savings. When investments are considered, investing in a fixed deposit is measured as the safest option. Fixed deposits are considered as a low-risk investment compared to other investment options. There are different investment options available to choose from, but the fixed deposit is the most preferred one.
Fixed deposit investments are a onetime investment, wherein you have to invest all your funds at single handed. Although a fixed deposit (FD) is a onetime investment, investing all your savings at one time is not an ideal decision. As fixed deposit investment restricts from fund withdrawal, investing all your funds at a single time can get difficult during a financial emergency.
Fixed Deposit Interest Rate:
When talking about fixed deposits, the interest plays an important role. The returns that you will be earning over your investments, depending upon the interest that you earn. Interest is an important factor that you cannot miss out while choosing your fixed deposit. The interest rate offered on fixed deposits varies from each financial institution. Some financial institutions can offer you a low-interest rate, while some can offer you with a higher rate of interest. When it comes to earning higher returns over fixed deposits, Non-Banking Financial Companies (NBFCs) offer a higher interest rate compared to banks.
In case if you are not sure about the interest rate that you are offered over your fixed deposit, you can also calculate before investing your funds in FD. A fixed deposit calculator can help you do so. There are two important factors that determine your fixed deposit interest amount: The amount that you invest and the tenure that you are investing it for. While calculating the interest amount, it is essential that you enter these two factors in the fixed deposit calculator. Calculating your interest through FD calculator will give you an estimated interest amount that you will be offered by your financial institution.
The financial institution will only charge you for the tax if the interest amount that you are offered exceeds over INR 10,000. In case if you are planning to invest a lump sum amount in fixed deposits, then there are chances that you may have to pay tax over your fixed deposit. In such a situation, you can split your lump sum fund and invest it into a different fixed deposit account. By doing this you can escape from paying taxes.
If you are stuck in a financial emergency, the fixed deposit investments will restrict you from withdrawing funds from your FD account. In such a scenario, you have to break your FD account, which can make you pay penalty, and also in future, the interest rate that you will be offered might be low. In this situation, you can use the overdraft facility offered by fixed deposit. In an overdraft facility, you can withdraw up to 90% of the amount from your fixed deposit account in a financial emergency. Here, you also have to pay an interest over the amount you withdrew on the last day of the overdraft facility. By using an overdraft facility, you can withdraw your funds easily from a fixed deposit.
Fixed deposit investments involve less risk which makes them more preferable than other investment options. Instead of saving your funds you can always go for investing it, as it helps to earn high returns.