Fixed Deposit: Why is This The Darling of Investments? 10 Special Features That Investors Just Can't Resist

Fixed Deposit: Fixed deposits are a great alternative for investors who want guaranteed earnings without taking on too much risk. Additionally, you can use your fixed deposit as collateral if you ever need a bank loan. Now that you have a better understanding of how fixed deposits operate, you might think about applying for one. However, you should first conduct extensive research and collect all the necessary information on the various types of fixed deposit products.

Flexible Investment Amounts

The following ten benefits of fixed deposits make them the go-to financial option for people with low risk tolerance:

Accessible Investment Options

FD is an accessible alternative for investors with a range of financial capacities because it allows for flexibility with regard to the initial investment amount. There is no upper limit, so people can start saving with as little as Rs 1000 and work their way up to a larger amount.

Flexible Investment Tenure

The length of an investment can be chosen by the investor; it can be as short as seven days or as long as ten years. Furthermore, FDs have the option to be renewed if needed, giving investors a handy opportunity to match their investment tenure of choice with their financial objectives.

Loan Against FD Convenience

The opportunity to obtain a loan against FD without having to prematurely withdraw the FD is an additional benefit. Banks normally lend 90 to 95 percent of the entire FD amount, with an interest rate that is marginally higher than the FD's. The FD pays the remaining loan balance in the case of a delayed repayment.

Market Stability through FDs

Investors are protected from the effects of market swings by FD. Investors can anticipate the maturity amount with certainty because the interest rate that applies at the beginning of the FD is the same for the duration of the investment.

Tax Benefits of Long-term FDs

Investors who hold foreign direct investment (FD) for a minimum of five years are eligible for a Section 80C tax exemption. FDs having a term of fewer than five years are subject to taxes, though. Furthermore, interest that accrues from the bank is taxable if it exceeds Rs 40,000 in any of the five years.

Predictable Returns

The investor is well aware of how much their money will increase over the specified period of time. All demographic groups find FD appealing since they want to maximise returns while protecting their income.

The desirability of FD as a safe investment is influenced by recent improvements in returns. Notably, the Deposit Insurance and Credit Guarantee Corporation (DICGC) guarantees the total safety of the deposited cash even in the case of a bank collapse by offering insurance coverage up to Rs 5 lakh on bank FD.

Low Investment Entry

Investments start at little Rs 500.

Senior Citizen Benefits

Commercial banks typically give senior citizen customers returns that are 50 basis points greater.

Liquidity Advantage

If an investor needs money, they can readily liquidate an FD.

Higher Interest Rates

Interest rates on fixed deposits are usually greater than those on standard savings accounts.

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