Are you planning to open a Fixed Deposit Account? For years, FDs have been the most sought-after investment tool among Indian Investors. The best part about the fixed deposit is that it offers ample capital safety and fetches you a reasonable return within a fair time.
Investors love to invest in fixed deposits, which offer them ample cash liquidity. You can easily calculate the maturity value using the fixed deposit interest calculator. The paragraphs underneath shall discuss the features and benefits of the FD accounts.
An overview of the Fixed Deposit Investment
You can approach any scheduled commercial Banks or Non-Banking Finance Companies to open a Fixed Deposit Account. You need to contribute lump sum money for specific investment tenure. You will plow back the capital corpus and the interest earned on maturity. You retain the flexibility to select the investment tenure as per your financial plans. You can decide between cumulative and Non-Cumulative payouts based on your financial needs. The lock-in for an FD account can span a maximum length of 10 years. On maturity, you can even consider re-investing the corpus for any given tenure.
What are the key features of the FD Account?
Before you invest in FD accounts, you need to know the key features of these investment tools. It will help you to plan your investments appropriately to materialize your financial plans. Here come the fundamental points in that regard:
The investor can decide the investment tenure as per their choice. It can vary between a few days to the maximum length of 10 years at a go.
The FD interest rate is usually higher the longer investment tenure you select.
For their tenure, you will be paid interest at an average rate previously decided when opening the FD account.
The investment return gets compounded monthly, quarterly, or half-yearly.
You can opt for the Cumulative or the Non-cumulative payout. The non-Cumulative payout is appropriate for those who want a regular income. A cumulative payout serves investors to look into a financial endowment or invest in long-term financial plans.
You may consider partial or complete withdrawal of the fund anytime between the investment tenure. However, any premature withdrawal will compel you to pay a premature withdrawal penalty. The rate in this regard varies with the actual length left for maturity and from one institution to another.
If you are an aged citizen, you may qualify for a higher interest rate than usual.
What are the key benefits of the FD account?
The following are the key benefits of the Fixed Deposit Account:
The biggest benefit of FDs is that it offers you the maximum Capital Security. The RBI offers security on FD accounts to the extent of 5 Lakhs. Thus, your investment in the Fixed Deposit can never sink. It makes FDs the most suitable investment option for investors reluctant to shoulder major investment risk.
The assured return fascinates investors the most to invest in FDs. In addition, depending on the investment value and tenure, you will get entitled to interest at a specific rate, and you can know the maturity amount even before investing in the FDs.
As the Reserve Bank of India supervises these investments, these tools are safe.
You can keep the interest compound by selecting the cumulative payout. In this case, you will get restricted from withdrawing the interest midway between the investment tenure. Thus, your capital will keep growing much faster, helping you meet your long-term financial plans.
If you need regular income, you can opt for a Non-Cumulative payout. In this case, you can withdraw the interest periodically, which will help you to meet your daily expenses. The interest gest compounded monthly, quarterly, and semi-annually. The non-cumulative payout is suitable for elderly citizens who have retired and do not have a regular income from other sources.
To meet exacting cash needs, you can avail of premature withdrawal. However, you might need to pay the penalty for such a withdrawal. However, it is a good option to consider, especially if you consider it to meet your needs by availing of a loan.
Banks and NBFCs welcome you to apply for cash loans by pledging the FD Certificate. You can expect up to 90% of the FD amount as a loan, coming at the lowest interest. It is a good way to meet your exacting cash needs without liquidating the Fixed Deposit.
You can approach any Banks, Non-Banking Finance Companies, and Housing Finance Companies to open a Fixed Deposit. Moreover, it is possible to make these investments both in online and offline mode.
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