When it comes to financial advice, there’s no shortage of people sharing it freely in India. From financial gurus on TV and the internet to your neighbour, everyone has something to say on your choice of investment instruments. Unfortunately, their advice can be as unpredictable and volatile as the present equity, real estate, debt or gold markets.
The markets can change its course anytime owing to multiple factors such as global oil prices, budgetary and monetary policies, bank interest rates, fluctuations in the dollar and global trade environment. When the market sentiment is cautious, the best course of action is to stick to a tried, tested and reliable asset class known as fixed deposits. Contrary to popular opinion, FDs have not lost its sheen and even today a considerable number of retail investors bank on it. Still today it is one of the best one-time investment tools available to the Indian household.
Fixed deposits may sound boring and out-dated with all the sophisticated investments instruments available today. But are other options as reliable? This question is not valid if you have plenty of appetite for risk. You may even invest your money in Bitcoins. But if you want to play it safe, a fixed deposit is your best option and nowadays it gives decent returns, too.
For instance, fixed deposits available on Finserv MARKETS offer the best FD interest rates in India, up to 8.95%, and comes with High CRISIL FAAA rating. If you are still not convinced that fixed deposits are for you, here are the top reasons why FDs are still viable.
Comparatively higher interest rates
Recently the RBI reduced the interest rates for small saving schemes such as Public Provident Fund (PPF) and National Savings Certificates (NSC) from 8% to 7.9%. Interest rates for Senior Citizens Saving Scheme and Sukanya Samridhi Yojana were also brought down to 8.4% and 8.6% respectively. These popular saving schemes also have long lock-in periods which may not always be convenient when you need money.
Comparatively, when you apply for fixed deposits available on Finserv MARKETS as a first-time customer, you can earn up to 8.6% returns and get up to 8.95% FD interest rates on your deposits if you are a senior citizen. They also come with flexible tenures from 12 months to 60 months.
Assured returns and immune to volatility
According to market reports, while 2018 witnessed a very volatile equity market, it also saw financial institutions increasing FD interest rates. One of the biggest advantages of fixed deposits is guaranteed returns and the safety of your capital. Your capital is also protected and you get assured returns when you invest in government bonds and treasury bills. However, the returns are much lower.
Flexibility and liquidity
While other risk-free investment tools with guaranteed returns have long lock-in periods, fixed deposits offer high flexibility and easy liquidity. You can invest in an FD with a tenure ranging from 1 week to 10 years but at the same time, you can liquidate the same in any emergency situation. While SIPs, ULIPs, whole life insurance plans require regular payments, a fixed deposit is a one-time investment that doesn’t require frequent payments.
Alternatively, you can also take loans with the fixed deposit as collateral up to a certain specified amount. Some financial institutions levy charges for premature liquidity while some financial institutions don’t allow premature liquidity of FDs; check the terms and conditions before you invest.
Always opt for fixed deposits with good credit ratings for safety and good returns such as the fixed deposits available at Finserv MARKETS. These fixed deposits come with stable ICRA MAAA and CRISIL FAAA ratings. It is easy to apply for an FD on Finserv MARKETS; you can do that within minutes in a few clicks online.
Few things to consider before investing in FDs
Though fixed deposits are safe and offer assured and decent returns, it is still only an investment instrument for a conservative investor. You have to factor in things such as inflation and tax to ultimately calculate your returns. If your income is above the current tax threshold of Rs. 5 lakh, the returns on fixed deposits will be taxed as per applicable rates. However, you can save taxes by choosing a minimum investment tenure of 5 years. Rather than utilizing FDs as a one-time investment tool, you can also invest in fixed deposits in regular intervals. You can plan those intervals according to various events in your life when you may need a specified or an estimated sum of money. That way it will serve the purpose of a ULIP for you.
When you apply for a fixed deposit, apart from interest rate and tenure, you should also check regarding the frequency of interest payments, rate of penalty on premature withdrawals, and the safety and reliability of the financial institution.
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