All have a dream to increase wealth through suitable investments. However, the choices for such are many. There is, of course, the option of mutual funds, SIP and so on. There is even a good old savings account. Yet, one of the most useful and safe forms of savings is a fixed deposit.
The reasons for having a fixed deposit are many. From the attractive interest rates of FD to the security, the list goes on. Market-related investments are mostly a gamble. Also, when it comes to savings accounts the interest rates of FD surpass them any day.
To convince you better let us look in detail at some of the aspects which make a fixed deposit the best.
- Simplicity: When it comes to investment options, the simpler, the better. There are a number of ways to invest out there; however, you want tension free and easy to understand. Fixed deposits fit the bill perfectly. You do not constantly look up the market happenings to get to know about your investment either.
- You want a loan; a fixed deposit can help you there: Fixed deposits have always been a sound and secure form of investment. So much so that banks are willing to stake their money on a fixed deposit too. So, if you are in need of money and happen to have a fixed deposit use it as collateral to get a loan! There are very few other financial instruments that extend this great facility.
- Compound interest has always been your friend: The wonders of compound interest need no further explanations. It is the best way to increase one’s wealth over time, especially if started early in life. You can earn an interest in 2 ways, either cumulative or non-cumulative. In the cumulative option, one can withdraw the interest earned in a quarterly, monthly or yearly fashion. Where in the non-cumulative alternative, you get it all together at maturity.
- Senior citizens are at a benefit due to the higher interest rates of FD available to them: The best benefit is available to senior citizens. The higher interest rates of FD for them makes it a lucrative investment option for senior citizens.
- An FD is a blessing in disguise to save taxes: Granted the interest earned from an FD is taxable; however, it is far outweighed by the tax-saving benefits an FD offers. If you make an FD and invest a certain amount, you can claim a significant reduction in tax that is up to Rs 1.5 lakh. This is, of course, only in the case of one financial year. This is another reason why a salaried person often prefers secure FD as opposed to other forms of investment.
- Among the highest security available when it comes to investments: As already mentioned banks approve a loan based on a fixed deposit. The only reason is the high security this investment offers. The ICRA rates fixed deposits as ‘MAA+’ which essentially means lowest credit risk. This is a reason why even big market players always have some investment in the form of fixed deposits.
- A very low risk involved when investing: This needs no explanation as there is virtually no risk involved when one invests in a fixed deposit.
After these various factors mentioned, you are certainly convinced of the vastly superior benefits of a fixed deposit. So, go on and invest in one, the rewards are sure to satisfy you!