There are countless ways of making money whether it’s investing in the stock market or in mutual funds, and countless other saving schemes, but a fixed deposit account remains one of the most stable go-to options for both new and seasoned investors.
A fixed deposit account is an investment account that can bae opened at any lender, be it a bank or a non-banking financial company. Here your money is deposited for a fixed period, and a fixed interest rate is paid after the completion of that period.
Here are some of the many advantages of having a fixed deposit account:
- Earn a Higher Rate of Interest
A fixed deposit account offers one of the most alluring rates of interest, higher than a savings account. Note that FD interest rates vary across different banks and different tenures. Interest amount on FDs are calculated quarterly, half-yearly, yearly or at the time of maturity. Hence, one of the advantages of having a fixed deposit account is that you can choose the time period depending on the rate of interest on fixed deposit, or vice versa.
- It Encourages Savings
When you deposit your money in an FD, it has to remain untouched in your account for a certain period of time without you making a withdrawal. This makes sure you begin saving wisely.
Not all of us have develop the habit of saving at least part of our salary at the beginning of our career. Take this example for instance: Like most young professionals, Moksha Rao, 24, spent all her money as and when she earned it. It is easy to forget to save money, especially when you just begin earning it. Moksha realised she was in a pinch much later, when she did not have any surplus funds to invest in assets like a car. She took the tried and tested path of opening a fixed deposit account, which made her set aside some money every month. She soon developed the habit of saving, and started reaping its benefits. Like Moksha you too can invest in FDs and see your savings grow.
- Assured Returns on Investment
Low risk, high rewards and a guaranteed return on investment may sound too good to be true, but it is exactly what a fixed deposit account promises. It is as easy as depositing a certain amount of money for the specified time period, and enjoying the interest it brings at the end of that time period along with your initial investment.
- It attracts a Variety of People
Young professionals, who want to begin investing their hard earned money, are daunted by the market. The high risk associated with the stock market can be intimidating, which is why a fixed deposit account is the easiest way out. It barely takes any time and effort, and most importantly, one does not require extensive knowledge before investing. Similarly, seasoned investors need at least one solid and safe option to fall back on.
- You have the Power to Make Decisions
You have the opportunity of choosing how long you want to invest your money for. Ii can be anything from one month to one year to ten years. Not only that, but in a fixed deposit account, you choose when the interest is payable—monthly, annually, or at full maturity, depending on when you need the money.
There are a multitude of parameters to be considered before picking the best option. Different schemes, maturity periods and rates of interest may have you confused, but you may find that your search ends at Banks and NBFcs. With attractive rates of interest, flexible tenors and online account management.