Planning To Invest In Fixed Deposits? Here Is What You Want To Remember Of
Published On Nov 10, 2021 10:00 AM By InsuranceDekho
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Bank Fixed Deposits are a financial long-term investment tool which helps you to save and invest money from your monthly income. The investment made in Fixed deposits provide you returns over a fixed period of time and can help you in your rainy days and future.
Bank fixed deposits are one of the most traditional and reliable means to invest, as you get a fixed interest and profit when invested for a particular period of time. Fixed deposits are also preferred by most of the people for wealth creation and saving taxes. Yes, Fixed Deposits are eligible for tax deduction under 80C.
Things to Know About the Bank’s Fixed Deposit Account
- Bank fixed deposit offers high-interest rates as compared to savings accounts with the bank. The interest rate offered on FD schemes can go up to 9% but generally, it depends on the bank you chose and on the market.
- One can open an FD account with all the top banks.
- Once you add money to your Fixed Deposit account, the interest which you will get remains the same throughout the tenure.
- You cannot withdraw the money deposited in the fixed deposit before the maturity period.
- In case of emergencies, you can liquidate the deposited amount but it will be done at a lower rate of interest.
Features Of a Bank’s Fixed Deposits
To invest in a fixed deposit account one needs to deposit the money only once in the beginning. So, you don’t have to worry about timely payments.
A bank’s fixed deposit is a long term investment plan. When investing in FD your money is kept safely for a longer period at the same time earning you timely interest.
You get FD interest monthly, quarterly or even yearly as per requested while opening the account.
Fixed Deposits are tax efficient and one can save up to Rs. 1.5 lakhs under section 80C of the income tax act.
How to Open a Fixed Deposit Account?
Steps to follow:
To open an FD account is quite easy nowadays. If you have an internet banking account, you can open an FD account yourself. You just have to fill the online form with your bank. Your bank already has KYC done, so you don’t need to do much.
One can also open it offline, for that you need to go to a bank and get the application form. Fill the form and submit it in the bank itself. You will be asked to submit some documents along with the form.
Documents Required to Have an FD Account
- ID proof
- Residential proof
- Passport size photographs
- Age proof (in case of senior citizens)
- Once you have deposited the amount, you will get an FD receipt. Keep this receipt safely, as you need to show the FD receipt at the time your FD matures.
Advantages of FD
The list includes:
No Risk Involved
When you invest in FD your money is totally safe, there is no risk involved and the return is guaranteed.
Loan Against FD
During emergencies, you can rely on FDs. One can liquidate an FD easily, but in this case, you will be getting less interest. One can also avail secured loans against their FDs.
Having a fixed deposit provides your regular income in the form of interest payout throughout your tenure, regardless of the market fluctuations.
So, whether one should invest in a bank FD should depend on two main factors. One, the risk appetite of an individual. If he or she is highly conservative and interested in safeguarding the capital invested, then bank FDs are among such options. Two, the choice of going for FD as an investment option should depend on the financial need. Bank FDs can be easily liquidated at any point in time and can come in handy in case of any financial emergencies.
Also read: Are Fixed Deposits A Good Idea?
Fixed Deposits V/S Endowment Plans
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.