After life insurance, fixed deposit is the most preferred investment option in India. Fixed deposits are low-risk and they provide guaranteed returns. If you opt for fixed deposits, you will only have to invest one time throughout the entire tenure of the fixed deposit. Unlike savings, fixed deposit provides you with higher returns
FD is the best investment option for the salaried individual because you will have to devote your funds only once. Since the rate of returns is high, they are considered as the best option for the masses. One of the advantages of fixed deposit is that the rate of interest is not easily affected by the volatility of the market. Another advantage is that the amount that you invest gets an insurance of about INR 1 lakh so even if the financial institution goes into a loss, your money is safe.
Since the tax is levied if you earn more than INR 10, 000 as interest returns from your fixed deposit in one financial year, you need to calculate in advance how much return you will be earning. There are many online calculators available where you can check your interest returns. If you are earning more than INR 10, 000 in tax returns then you can split the investment amount into smaller amounts and invest them in different fixed deposits.
With the fixed deposit market changing drastically over the past few decades, it is not known to a lot of people that even companies provide the facility of fixed deposits. While both banks fixed deposits and company fixed deposits have their own attraction, it is necessary to know which is better.
Below are the points you need to remember when it comes to investing in fixed deposits:
Bank Fixed Deposits:
When you invest in bank fixed deposits, you do not necessarily need to hold a savings account with them. With the help of modern technology, banks even help you in opening a fixed deposit online. There is a complete process where you have to submit your documents to the bank before opening a fixed deposit.
No two banks offer the same rate of interest which is dependent on their policy. As bank fixed deposits are associated with the Reserve Bank of India there is lesser risk associated with it as compared to the other investment options.
The Company Fixed Deposits:
It is a lesser known fact that companies offer fixed deposits too. A lot of people choose company fixed deposit as opposed to bank fixed deposits. This is because they provides high rate of interest on FD in comparison by the banks.
Before you invest in company fixed deposit, it is necessary for you to know that in involves some risk. Since these fixed deposits are offered by private companies, if the company goes into a loss, your investment will be lost. It might also happen that when your fixed deposit matures, the company might not have the capital to pay, so that will be a huge loss for you.
The most important thing that you need to look for while investing in fixed deposits is the rate of interest. The higher the rate of interest, more returns you will get. The rate of interest that a bank or a company offers is dependent on the tenure of the fixed deposit and the amount that you invest and in India the FD is a sought after investment owing to high fd interest rate but fixed deposit interest rate fluctuates from time to time. Since companies are hugely affected by the volatility of the market, you can never be too sure if your company can sustain the market if there is a crash.
While both types of fixed deposits have their own pros and cons, you should always choose the one that fits your financial goals and needs.
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