Your decision to open a Fixed Deposit (FD) is a smart choice to save your hard-earned money for the longer run. And if you are still planning to open an FD and are confused about choosing the right platform and making the most of your fixed deposits, you are in the right place.
All Indian banks offer the facility of opening an FD. But, there are these Non-banking Financial Companies (NBFCs) that offer impressive FD interest rates that are higher than those provided by the banks. While banks may seem a reliable option, you can trust the companies that are highly rated by ICRA (Investment Information and Credit Rating Agency) and CRISIL (Credit Rating and Information Services of India Limited).
How to make the most out of your fixed deposits?
Investing in an NBFC
NBFC is a non-governmental financial provider due to which it is often considered as an unreliable platform to invest. This is indeed not true. NBFCs is accredited with MAAA and FAAA by ICRA and CRISIL which is the highest credit ratings given to any company. The FD interest rates of NBFCs range between 7.60% to 8.40% depending on the amount deposited and the tenor of the FD. The FD interest rates of banks range from 3.50% to 7.00% per annum.
Reinvesting
When you reinvest by renewing your FD after the maturity date, the FD rate of interest increases than the standard interest rates. If you wish for higher output for your investments and are ready for a long-term investment, then reinvesting is the best choice for you. You can also opt for laddering your FD by dividing your principal amount and investing in multiple FDs for different tenures. By doing so, you can assure a continuous income and higher FD interest rates.
Fixed Deposit Schemes
There are two schemes available in an FD – cumulative and non-cumulative. In a non-cumulative scheme, the interest is payable on a pre-decided period (monthly, quarterly, half yearly, and annually) as chosen by the customer. While in a cumulative scheme, the interest is paid annually. Out of the two, the most valued scheme is the cumulative scheme due to the increase in FD interest rates gained by investing for a longer period. If you want a regular income from your investment, you must apply for a non-cumulative FD account, and if you wish for higher interest rates, you can choose the cumulative scheme.
Points to remember for investing in an FD
- Premature withdrawal will invite penalty
- Ladder your investments
- The interest earned is fully taxable
- Decide the tenure carefully so that it can benefit your investment.
- If you are a senior citizen, check for the best interest rates in the market and choose your provider wisely.
Investing in an FD is an attractive investment choice for people looking for assured and stable returns on their investments. With the facility of online application and management of the FD, you can open an FD account right away by resting on your bed or while at the office. The FD calculator helps you to calculate the maturity and FD interest rates efficiently. Research smartly and invest wisely and live a healthy and tension free life.
