A fixed deposit is a very good and safe investment option that many people opt for. There are several benefits you get when you open a fixed deposit account. From steady rates of interest to low risk and FD helps to stabilize your financial portfolio while bringing in some good returns. Read on to know more about the fixed deposit rates and other benefits and understand why you need to make a few FD investments as well.
Factors that make a fixed deposit a great investment
It is always a good idea to invest in a fixed deposit. You can download a good personal finance app and start your FD investments today. Here are a few reasons why:
Better interest than RDs -
There are two types of bank deposits that you can go for - the fixed deposits and the recurring deposits. While both are safe and fruitful, you get better interest rates in FDs than you do in RDs. The FD interest rates in SBI, for example, range between 5% and 6%, while the RD interest rates stay around 4% to 5%. Therefore, you get high-interest returns when you invest in an FD.Better liquidity than post office schemes -
Another reason for you to consider a fixed deposit is that it offers better liquidity as compared to the post office savings schemes. The popular post office schemes such as the PPF and NSC have long lock-in periods that last for years. Even if you have an emergency, you don't have access to your own funds. This is not the case with the FDs, as you can break a fixed deposit at any time if needed. The fixed deposits are also available in short durations, at times as low as 7 days. The fixed deposit rates differ with the duration, but an FD is definitely more flexible.Less risk than mutual funds -
The FD interest rates in SBI, as well as other banks, are fixed. They do not change as per the market conditions. This fetches you fixed returns, unlike that of the mutual funds. A mutual fund is a much riskier savings option as compared to a fixed deposit. It surely has the potential to earn higher returns, but the risk is much higher and not suitable for everyone.Guaranteed returns -
If you want to earn some safe and fixed yields, depending upon a fixed deposit is a good idea. The fixed deposit rates are always fixed so you know right from the beginning how much you stand to earn. This helps you to make and stick to financial goals in an easy and successful manner.Tax saving -
If you log in to your personal finance app and look for some tax-saving investments, you will find the fixed deposits there as well! Yes, there are some special fixed deposits that help you to save tax. These FDs have a slightly different interest rate structure and lock-in period clause. Read the terms carefully and then invest to get the best returns and to save your tax as well. Tax Saving Fixed Deposits have a lock-in of 5 years.Reliable -
And last but not the least, you get to make a very reliable and bankable investment when you opt for a fixed deposit. As you know, the FD interest rates in SBI and other banks are fixed. All the other clauses are fixed and transparent too, so there is no room for any ambiguity or confusion. As a result, you end up with a secured and reliable investment.
The final word
These are the factors that prove that a fixed deposit is indeed one of the best investment options that you have. Download a good personal finance app and start your FD investments right away.
