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How fixed deposits help to keep the Indian economy stable during volatility

By Finserv MARKETS - Aug 12,2019
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How fixed deposits help to keep the Indian economy stable during volatility

From stock market pros to your next-door neighbour, nearly everyone across the country has their take on what the best investments are, the top investment plans in the market and the best return-generating investment options to meet their respective goals. These opportunities include fixed deposits, one of the most popular investment options that guarantees the safety of your capital. It is also becoming increasingly clear that Indians are riding an upwards trajectory when it comes to financial savings. Higher personal disposable incomes will result in higher household savings that will be channeled into different financial savings and investment instruments.

How fixed deposits help to keep the Indian economy stable during volatility

At a time when there’s increasing volatility across several asset classes, like equity markets and real estate, finding the best investments to invest in is a thought-provoking undertaking. Fixed deposits offered by banking and financial companies, like the ones available on Finserv MARKETS, help mitigate the risks that come with market volatility and are pitched to be one of the ideal investment options in this market landscape. The markets are quick to react to geo-political changes, macro and micro swings in the economy and overall trade conditions.

Take the example of the stock markets before elections this year. The market went into a tizzy, particularly during exit poll predictions. Nifty gained 250 points while the BSE Sensex moved 850 points upwards. Albeit the small increase, there’s no denying that volatility is a very ingrained feature of the equity markets. The week prior to exit polls saw Nifty cross the 11,400-mark. Investors are also wary of an incoming bearish equity environment.

This has led most investors to sit on the fence, watching as the markets shift. Most investors look to protect their capital, while still gaining returns. In such an environment, one of the best investments would be fixed deposits that ensure ample stability during volatility. By clubbing stability with attractive returns, fixed deposits appeal as a reliable investment option.

The Investors’ Risk Appetite

Most investors have a specific risk appetite that defines and shapes their investment plans and portfolio. A portfolio that’s highly aggressive would mean that the investor is letting market movements guide the returns. A conservative portfolio would mean that the investor is risk-averse and would be angled towards investing in fixed deposit plans. This will help investors diversify their investments and give them a stable income too.

This is largely because fixed deposits specify the returns and guarantee the income to the investor right at the time of investing. The people who fall within the age group of 30-50 have moderate risk-taking penchant, so they can invest little higher amount in FDs compared to the previous age group, whereas people who stand in age bracket of more than 50 can opt for large investment in FDs as the risk-taking ability is the lowest for such age group. Besides, at that age, you are not looking for a very long-term investment.

An increase in fixed deposit interest rates is driven by factors such as an increase in loan to deposit ratio, declining currency value and increasing crude prices. When key central bank rates rise, banks and other financial services also raise their interest rates. This indicates that for an investor, this is one of the optimal periods to lock in on a fixed deposit that offers the best interest rate.

At Finserv MARKETS, you will be able to gain access to multiple fixed deposit options and based on your investment horizon and preferences, select the right plan through the platform. If you’re looking to maximize your returns, you can space out your fixed deposits across varying time periods – helping you tap into the benefits of changing interest rates across a period and maintaining liquidity with fixed deposits that are maturing.

With a fixed deposit in Bajaj Finance, investors have the independence to select their payout frequency according to their needs. If you’d need any additional periodic payouts, there’s an option to select non-cumulative fixed deposits that make payouts every month or every half-year.

However, if your goal is solely focused on wealth creation, opting for a cumulative fixed deposit is a better option, since the amount is compounded and the interest is transferred to the investor when it matures. The best takeaway? You have the freedom to make these choices without focusing on any external factors like market volatility.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522