Fixed deposits have been the first preference of a lot of people. Buying an FD will help you safeguard your family’s financial future. That is why almost every other person has a fixed deposit plan. It is a tax saving investment plan; in case you want to opt for something that offers this benefit. But here are the seven things you need to know about FDs to make the right investment decision.
Looking for a long-term investment option? Need not worry; FDs (fixed deposits) will help you plan your financially independent future. Fixed deposits are one of the most preferred and safest investment options available for those who are into mutual funds and equities. They make sure you get to fulfil all your goals aspired for different stages of your life by allowing you to manage your financial risks. Be it your child’s future, your retirement plan, or an unforeseen expense you need to care for. Fixed deposits are a smart way of accumulating savings for a financially secure future.
Choose a scheme– Companies offer different FD schemes that pay interest based on your choice, whether cumulative or non-cumulative. If you are looking for a monthly, quarterly, or annual income, then you can choose non-cumulative schemes. But if you want to save and earn the returns over a long period of time, then you can opt for cumulative schemes. In simple terms, the accumulated interest and principal are paid on maturity.
Interest Rate– The rate of interest depends on the company and is subject to change at the company’s sole discretion. Fixed deposits offered by HFCs and corporates usually carry a higher interest rate than the fixed deposits of banks.
Minimum Deposit– Different companies have different minimum and maximum deposit amounts when investing in FDs. Ensure you get in touch with your preferred company before choosing an institution and find out all about their minimum and maximum deposit amount.
Tenure– Corporates usually offer a tenure starting from 1 year to 10 years. Choose your tenure depending on your plan. It is essential to think about it before choosing a tenure because premature closure of your FD can result in a penalty that will eventually reduce the total interest you earned on your deposit.
Security– Fixed Deposits are a secure form of investment type that offers ensured returns. Credit rating agencies rate the fixed deposits by HFCs and corporates for the convenience of the investors. So choosing a company wisely is essential.
Nomination– Do not leave the nomination section in your FD blank. Even if you are a sole depositor, you must choose a nominee that will get the amount you collect in FD if you are deceased. The nominee can claim the entire amount with its interest when the death of the depositor takes place.
TDS– Standing for Tax Deducted at Source, the company must deduct taxes beyond the amount of INR 5000. Suppose the interest income from the corporate fixed deposit is more than INR 5000; that is when TDS will be deducted. The limit of the TDS for all kinds of HFCs is INR 5000.
Any type of investment in FD is vital if you want a financially secure future for yourself and your kids. You can now open FD online, thanks to the Internet. If you want to know the interest rate, you can check it out on an FD calculator of your preference available online.