Unlike savings accounts, NBFCs and banks offer various types of fixed deposits, with the help of which you will be able to deposit an amount of money to generate a higher return than a savings account. From seven days to ten years can be specified for the period of the deposit. After a set period, it’s more beneficial than a savings bank account since you get a higher percentage return.
On the other hand, one can invest the same money in the stock market, where you will get a higher return percentage. In order to get better returns and know what is FD, middle-class families prefer FDs since they are risk-based investments.
It is a sure shot that you will get your profits on your assets when you place your money in an FD. Rather than leaving those assets idle in an investment account. Your interest in a fixed store will be measured until you terminate your development.
The fixed deposit is an investment instrument requiring a lump sum deposit and an interest rate fixed until a predetermined maturity date. As long as the investment tenor remains the same, and you know what is FD, the interest rate on fixed deposits remains the same. You can choose from the following types of fixed deposit or term deposits depending on your needs:
- Scheme of monthly income: Here, you receive interest each month and a principal payment at maturity.
- You receive interest on your quarterly income deposit.
- Quarterly compounded interest is earned with a fixed deposit.
- Deposits over a year are compounded quarterly and paid yearly until maturity.
- This type of deposit reinvests and compounds interest quarterly, and interest is paid quarterly. Payment of principal and interest is made in a lump sum at maturity. The return is the maxim in reinvestment plans. In 9 years, you will double your money if you deposit Rs. 10.00 lac at 8% per annum with quarterly compounding.
FDs are the first priority of an Indian because they are safe, provide a good return, and offer withdrawal services prior to tenure.
The benefit of FD:
- It offers the best interest rate.
- Provide senior citizens with an additional interest rate
- Service for pre-withdrawals
- Service of automatic renewal
- NRIs can also make FDs and other investments.
In India, fixed deposits come in the following types:
Systematic Deposit Plan (SDP):
SDPs (Systematic Deposit Plans) are another option if you are unsure whether you want to invest all your savings at once. You can set a lock-in period between 12 and 60 months and make a fixed monthly deposit.
Deposits can start at Rs. 5000 and can range from 6 to 48 per month based on your preference. You are able to earn interest as per the prevailing interest rate on the deposit date when you make an SDP. With Bajaj Finance FD’s SDP, fixed deposit interest rates up to 7.35% are offered as a unique feature of the regular FD plan.
Cumulative Fixed Deposit:
You receive the interest earnings as well as the principal amount when you mature cumulative types of fixed deposits. Compound interest is compounded every quarter of the year and only paid at maturation, so savings grow substantially.
Non-Cumulative Fixed Deposit:
With a non-cumulative bond, you choose the frequency of interest payments before maturity. Your interest payment can be received every month, every quarter, every half-year, or every year. Senior citizens and those who can meet their ongoing expenses with interest payouts may find FDs the best option.
Tax-Saving Fixed Deposits:
There is an exemption on tax for principal deposits of up to Rs.1.5 lakh in a calendar year. The money cannot be withdrawn within five years due to a “lock-in” period. A lump sum deposit is required one time only.
Here are some things to consider before investing in a fixed deposit:
Special interest rates are available to senior citizens. A Bajaj Finance FD interest rate for Senior Citizens is 0.25% higher than the regular interest rate and can reach 7.35%. Additionally, investors who open an FD account online can take advantage of an additional 0.10% rate compared to those who invest offline.
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