Deposit your trust in Fixed Deposits
You work hard to earn a decent income for your family so that their financial needs are taken care of. After meeting your financial obligations you have some disposable income in your hands which you want to invest in good avenues which would provide higher returns and help your savings to grow. When it comes to choosing investment avenues, FD rates is quite popular among many. Do you know why?
What are fixed deposits?
Fixed deposits are fixed-income investment avenues which are available with banks, non-banking financial companies and post-offices. Under a fixed deposit scheme, you select the amount that you want to invest and the period of investment. The rate of interest is fixed by the institution offering the deposit scheme and based on the interest rate, the maturity value is determined. This maturity value is fixed beforehand and does not change over the investment period.
Why fixed deposits are a good investment avenue?
There are many reasons which make fixed deposits a very good investment avenue. These reasons include the following –
- Guaranteed returns
The best thing about a fixed deposit scheme is that the rate of return promised under the scheme remains fixed for the chosen period of investment. As such, fixed deposits promise the money which you would get on maturity of the scheme and your money is not exposed to market risks.
- Flexibility
When you opt for a fixed deposit scheme, you get the flexibility of choosing to have the choice of choosing the investment amount and the investment period. There is a minimum investment amount required for the deposit which is specified by the institution offering the scheme. You can invest any amount provided it is above the minimum level. Moreover, there is a range of investment periods available for you to choose from starting from 7 days and going up to 10 years. You can, therefore, invest as per your financial needs and present requirement. You can also choose to receive the interest earned on your deposit either periodically during the investment period or at once when the deposit matures. Even on the date of maturity, you can choose to roll-over the deposit to the next investment tenure or redeem the deposit, if required. With so many flexible choices, a fixed deposit scheme offers complete flexibility of investment to investors.
- Tax benefits
The investment which is done in five years fixed deposit schemes is allowed as a tax deduction. Investments up to INR 1.5 lakhs can be availed as a deduction under Section 80C. This deduction helps you lower your taxable income and, thus, save tax. Moreover, if you are a senior citizen, the interest earned from your fixed deposit investments would also be allowed as a tax-free deduction up to INR 50,000 under Section 80TTB. Given these tax saving benefits, fixed deposits are definitely a good option.
- Collateral asset
A fixed deposit investment acts like your financial asset. As such, you can pledge it as a collateral security for availing loans. Loans up to 60% or 70% of the value of your fixed deposit investments can be availed when you face a financial crisis.
So, if you are looking for a fixed income investment which gives good returns, is flexible, offers tax advantage and becomes your asset, place your trust in a fixed deposit schemeAnd watch your savings grow over a period of time.
