Fixed Deposits are a popular way of saving money in India. Apart from this, an FD can be a suitable choice if you are a risk-averse investor looking for a safe investment scheme that lets you stay stress-free. In this article, we explain what an FD is. We also explore the various features that make it an advantageous investment.
When you open an FD with your preferred bank, you deposit a sum for a fixed duration. This money earns interest at the current FD rates decided by your bank. Once the tenure of the FD is over, depending on the type of FD you choose, you receive the principal amount along with the interest earned. An FD can be of various types. Two of the notable ones include cumulative and non-cumulative FDs.
These deposits differ from one another based on the interest payout.
Features and benefits
When you open an FD, you can enjoy the following advantages:
- Stay stress-free
An FD is a safe avenue to park your money. It also lets you stay stress-free. The FD interest rates decided at the start of the deposit remain fixed. The returns also do not change based on political changes and alterations in market conditions. In addition, your deposits are insured up to Rs. 5 lakh under the DICGC.
- Manage easily
Some banks easily let you open an online FD using the Mobile or Net Banking facilities. You can also use these facilities to manage your FD anywhere and at any time. For example, you can add maturity instructions or change your nominee on the go.
- Enjoy competitive rates
When you open an FD and deposit a sum, you can earn interest at competitive rates. Hence, an FD not only lets you build savings but also enables you to grow your funds over time. This interest rate can vary across banks. It also depends on the tenure you opt for. So, consider various options to enjoy the highest interest rates on FD.
- Customise your deposit
Today, when opening an FD, you can customise it according to your investment goals. You can choose the type of FD you want, the amount you wish to deposit, and the tenure you are comfortable with.
- Start with a small amount
While the minimum amount required to open an FD may vary across banks, some may let you open it with an amount as low as Rs. 5000.
- Use as emergency funds
An FD is often considered a popular choice when building an emergency fund to prepare for unexpected financial troubles.
As evident from the pointers mentioned above, an FD offers various advantages. So, if you are looking for a safe and stress-free investment option, you can easily open an FD online using the Banking app or Internet Banking facility offered by your bank.