Fixed Deposit: When it comes to keeping your কষ্টার্জিত কষ্টার্জিত money safe and getting a certain return on it, Fixed Deposit (FD) is still one of the most popular and reliable options among Indian investors. Away from market fluctuations, FD promises a guaranteed returns, making it an attractive to investors and senior citizens especially avoiding risk. But while investing in FD, it is very important to take care of some things so that you can take maximum benefit.
What is Fixed Deposit? A simple understanding
Fixed deposit is a type of fixed deposit account where you deposit a lump sum for a certain period. Bank or financial institutions offer a pre-determined interest rate on this deposit. When the period is over, you get accumulated interest with the principal. The duration of FD can range from a few days to 10 years.
Benefits of Investment in FD: Why choose fixed deposits?
-
Security and certainty: FD is considered one of the safest investment options. There is almost negligible market risk and returns are guaranteed.
-
Fixed interest rate: The interest rate is fixed at the time of opening the account, so you know how much money you will get on maturity.
-
Liquidity (liquidity): If needed, FD can be broken prematurely, although it may be fined some fine.
-
Loan facility: Many banks also provide loan facilities in lieu of FD.
-
Special Rates for Senior Citizens: Banks usually provide a slightly higher interest rate to senior citizens on FD.
-
Easy investment process: Opening FD is a simple and direct process.
Important tips to keep in mind while investing in FD
It is necessary to consider some things before investing in fixed deposits so that your investment proves beneficial:
-
Compare interest rates: Different banks and financial institutions offer different interest rates on FD. Be sure to compare the rates of different banks before investing.
-
Correct election of period: Choose the FD duration according to your financial needs and goals. If you may need money in the near future, choose short duration FD.
-
Explain maturity instructions: When opening FD, make it clear what you want to do with the principal and interest on maturity – do you want to withdraw it or renew it.
-
Choose interest payment option: You can choose the option of interest payment (monthly, quarterly, half -yearly, annual or maturity) at your convenience.
-
Know the rules of premature withdrawal: Understand the fines and conditions imposed on premature breaking of FD.
-
Understand taxation (taxation): The interest received from FD connects in your income and it is taxed according to your tax slab. If interest income in a financial year is more than a fixed limit (currently ₹ 40,000, ₹ 50,000 for senior citizens), TDS (tax deduction at source) is also deducted. To avoid this, form 15G/15H can be deposited (if applied).
-
Must get nomination done: In the event of any untoward, your nominee can get money easily, for this, take advantage of the enrollment facility.
-
Invest in different banks (Diversification): If you are investing large amounts, then DICGC (Deposit Insurance and Credit Guarantee Corporation) can distribute your amount to different banks, keeping in mind the insurance protection of up to ₹ 5 lakh per bank per bank.
-
Cumulative vs. Non-Cumulative FD: Integral FD interest is attained with principal on maturity, which benefits compound interest. Interest is available at regular intervals in non-remot FD. Choose according to your need.
-
Beware of auto-renewal: If you choose an auto-renewal option, make sure you have the current interest rates at that time.
- India Pakistan War: Pakistan’s position begs the World Bank, give me your juice…
