Fixed Deposit are a great way to invest your savings. They are risk-free, easy to set up, and offer attractive interest rates. However, there are numerous fixed deposits available, and you should evaluate these schemes to pick the one that best suits your money-saving goals.
Types of Fixed Deposits
With different types of FD options available, you can evaluate and compare the schemes to choose the right option for yourself: metal rocking chair
1. Cumulative
This type of fixed deposit lets you accumulate interest on your deposit, and you can get both principal and interest earned at the time of maturity.
2. Non-cumulative
In this FD type, the interest on your deposit is paid out in fixed intervals, either monthly, quarterly, or yearly.
3. Tax-saving
If your goal is to save on taxes while investing your money, go for a tax-saving fixed deposit. This deposit usually has a fixed tenure of 5 years or more.
Features of a Fixed Deposit
- It is safer and carries lesser risk than other investment options
- You can accumulate more money by earning interest on your saving
- You can keep your money safe in an FD for as long as 10 years
- Many FD schemes let you deposit a large amount in any fixed deposit
- Senior citizens investing in FDs get the highest FD rates
Tips to Choose the Right Fixed Deposits
With so many fixed deposit options, it’s easy to get confused as to which FD is the right one for you. Consider the following tips to understand the important points when choosing a fixed deposit:
Interest rate
Interest rates earned can help you grow your money and should be the primary consideration when picking your FD. Many financial institutions offer the highest FD rates for a deposit of 200 days or more. And if the FD is for a senior citizen, the interest is even higher.
Financial Institution
FDs are considered a risk-free investment, but you still need to choose a financial institution that can pay back your investment at the time of maturity. In short, choose a credible financial institution.
Easy Application
An FD is an easy way to invest your money, and its application process should also be hassle-free. Many lenders offer the option to open an FD account online for a smoother FD process. The benefits of the online process are faster processing times, minimal documentation, and convenient application.
Premature Withdrawal
It can so happen that you might have to withdraw your FD for a financial emergency. Some financial institutions might charge a small fee when you try to withdraw your FD prematurely. So, when comparing FD schemes, try to find an FD that doesn’t have high premature withdrawal fees.
Loan on FD
You can get a loan against your FD or use it as collateral against another loan. Make sure the FD option you pick allows you the flexibility of getting a loan against your fixed deposit investment.
Documents Required for opening an FD account
The process of opening an FD should be minimal, including documents requirement. Most financial institutions need only basic KYC documents to open your FD account. Here are some common documents you need to get started with your FD:
- Identity proof, like Aadhar card, PAN Card, or Voter ID
- Address proof, like electric bill or bank statement with cheque
- Photograph of the person opening the FD
Conclusion
If you want to invest your money in a risk-free investment, FDs are your solution. You can open as many FD accounts as you want and make your money grow with the interest earned on your FD. Open an FD account online to get started with your fixed deposit easily!
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