In 2023, The Reserve Bank of India released data stating that over INR 103 trillion is currently locked in 24.23 million fixed deposits. This data highlights the dependability of fixed deposits and their wide popularity among Indian investors.
Regarding investing, discussions are frequently centered around risk and volatility, and fixed deposits emerge as a reliable and steady investment option. Fixed deposits, which offer a blend of predictability, security, and guaranteed returns, have long been favoured by investors looking to protect their funds and earn a consistent return. Read on to explore the features and benefits that make fixed deposits an appealing investment option.
What Is a Fixed Deposit?
A fixed deposit refers to an investment option provided by banks and financial institutions. It enables individuals to set aside a designated sum of money for a predetermined period at a fixed interest rate. The fixed deposit tenure may vary, ranging from a few days to several years. Any attempt to withdraw the funds during this time will incur a penalty.
Features of Fixed Deposits
The primary features of fixed deposits are as follows:
- Flexible tenure ranging from seven days to ten years
- The return on investment is paid out monthly, quarterly or at maturity
- Senior citizens usually get 0.5% higher fixed deposit interest rates than regular investors
- Partial or complete fixed deposit withdrawals are permitted with penalties
- Fixed deposit maturity amount can be reinvested without any hassle
Benefits of Fixed Deposits
There are plenty of benefits to opening a fixed deposit account. A few of them are listed below:
| Assured Returns | Fixed deposits are a great source of reliable and consistent returns, making them suitable for investors who value capital preservation and steady income. Investors are reassured that the fixed interest rate is unaffected by market fluctuations |
| Flexible Tenure | Fixed deposits come with various tenure options, ranging from a few days to several years. You can select a tenure based on your financial needs and goals |
| Tax Benefit | On a tax-saving fixed deposit with a five-year lock-in period, you can claim a deduction of up to INR 1.5 lakh under Section 80C of the IT Act, 1961 |
| Loan Against FD | A fixed deposit acts as a reliable safety net for financial emergencies. You can secure a loan by using your fixed deposit as collateral. Some banks lend up to 95% of the value of the fixed deposit, making it a dependable investment option |
| Encourage Savings | Fixed deposits hold your money for a fixed tenure, earning interest until maturity. This assists in maintaining better financial discipline by discouraging premature withdrawals |
Conclusion
A fixed deposit is a great choice for investors who prefer low-risk investments. Consider opening an FD online if you are seeking an investment option that ensures steady returns regardless of market fluctuations. Apply online today to ensure a secure financial future and peace of mind!
