Investing ensures present and future long-term financial security. In order to achieve this, there are many investment options available. Financial instruments with lower risk, such as fixed investment options like fixed deposits, government schemes, and PPF are some of the preferred investment options across investors of all age groups.
A fixed deposit is a financial investment instrument offered by banks as well as non-banking commercial companies. Here, you can deposit money for a higher rate of interest for a pre-determined tenor. Some NBFCs offer a fixed deposit interest rate of up to 7.85%.
Tax-saving FD offers you an added advantage of saving tax under section 80C of the Indian Income Tax Act, 1961.
So, what makes FD a better choice than other investment options? Read on to know more.
- Risk-free returns:
A fixed deposit is one of the safest investment options compared to other market-linked instruments, such as stocks or mutual funds. Unlike market-linked products that carry the risk of volatility and fluctuating returns (that may even result in losses), FDs do not contain such risks as fixed deposits are not subject to market variables.
If you are just starting your investment journey or building your investment portfolio, look out for FDs with a good credit rating to ensure the safety of returns. For example, if you invest in a company FD such as Bajaj Finance FD which is rated FAAA/stable by CRISIL and MAAA (stable) by ICRA, you can be assured of timely interest payouts. This is an easy way to arbitrage your risks and receives an assured amount at maturity.
- Greater flexibility:
Other fixed-income investment instruments such as PPF, NSC, SSY, etc. have certain restrictions in terms of the deposit amount and lock-in period. However, fixed deposits offer greater flexibility with features such as the Systematic Deposit Plan (SDP), loan against FD, and premature withdrawal. The SDP allows you to invest in small monthly deposits; whilst offering all the benefits of a regular FD investment. Also, flexible tenor options ranging from 12 months to 60 months; and the option to avail periodic interest payouts makes FD a highly flexible investment option.
- Power of compounding:With the cumulative FD option, wherein the interest earnings are re-invested along with the principal, you can multiply your savings with the power of compounding. This reinvestment of interest has a snowball effect on your investment. Cumulative FD is best suitable for you if you don’t need periodic interest payments. These FD schemes pay the interest along with the principal amount upon maturity. Cumulative fixed deposit schemes are also known as money multiplier schemes. On the other hand, in a non-cumulative fixed deposit scheme, interest is paid at fixed intervals to help you meet ongoing expenses.
- Better liquidity when compared to PPF:The primary benefit of fixed deposits as compared to the Public Provident Fund is that the former allows monthly, quarterly, and half-yearly or yearly interest pay-outs. However, this is not the case with PPF because your investment is locked for a long time. Moreover, partial withdrawals are permitted only after five years, subject to specific conditions.
What’s more, the periodic interest pay-outs from fixed deposits allow you to access funds at regular time intervals to meet expenses. As liquidity is available periodically, managing your cash flow in an efficient manner can be possible.
Investing in FD is easy with an online application procedure, and online account management via Experia- your online fixed deposit account.
From being tax saving instruments to protecting your hard-earned wealth, a fixed deposit is better than any other investment option available. It is an instrument that should definitely be there in every investor’s investment portfolio.
Allowing flexibility with flexible tenors and interest pay-out options, and paying up to 7.85% interest rate, which is one of the highest among peer investment products, a company fixed deposit such as Bajaj Finance FD fits all your needs, whether you’re looking for assured returns, high credibility, or high-interest earnings. Hence, it is a must-have investment for all types of investors.