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How to invest in a Fixed Deposit

By Finserv MARKETS - Nov 23,2019
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How to invest in a Fixed Deposit

A Fixed Deposit is a secure and popular investment option that allows you to invest funds for a long period of time and enjoy assured returns at an attractive interest rate. Here’s how you can make the best of this financial planning tool:

Choose the right type of Fixed Deposit

Depending on your financial goals, you will need to choose between two types of Fixed Deposit.

  • Cumulative Fixed Deposit

This type of FD reinvests the principal amount along with the interest accumulated, which maximises the returns. It is suitable for those who definitely will not need to access the funds nor the interest amount until the end of the tenor.

  • Non-cumulative Fixed Deposit

This type of Fixed Deposit offers an interest payout at regular intervals (monthly, quarterly, half-yearly, or annually). It is very useful to investors seeking regular returns to pay their monthly expenses, like pensioners.

 

Check the details of your FD which include:

  • Rate of interest and tenor

The interest rate is calculated based on the term you wish to hold it for, which ranges from 12 months to 5 years. Finserv MARKETS offers an interest rate of up to 8.70%. Senior citizens can avail an interest rate of 0.35% over and above the existing rates.

  • Taxation

As per the Section 194A of the Income Tax Act of 1961, the interest that is earned from investing in Fixed Deposits floated by NBFCs and banks is taxable in case it crosses Rs. 5,000/Rs. 10,000 depending on the type of financial institution. Often, tax is deducted at source for the same.

  • Choose the number of Fixed Deposits

Finserv MARKETS allows you to apply for up to five FDs with different amounts (minimum amount is Rs. 25,000). This lets investors maintain liquidity and flexibility while minimizing losses associated with premature withdrawals.

  • Credibility of the financial institution

Check the credibility of the financial institution whose FD you plan to invest in. Finserv MARKETS, for example, is rated FAAA/Stable by CRISIL and MAAA/Stable by ICRA. These high ratings mean that you can enjoy total peace of mind knowing your investment is safe and returns are assured.

To know more about how you can use a Fixed Deposit to achieve your financial goals, log on to Finserv MARKETS.

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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