Investing your hard-earned money requires careful consideration. Investment options like fixed deposits (FD) have been a popular choice among investors for decades. In fact, as per an SEBI report, 95% of Indian families choose to invest in fixed deposits over mutual fund schemes. The primary reason being the low-risk nature of FDs and the guaranteed fixed returns offered by them.
Are you wondering if it is financially prudent to open an FD online in today’s dynamic financial landscape? This blog delves into the crucial factors you must consider while investing in fixed deposits. It will also discuss why a fixed deposit can be a sound investment option for your financial portfolio.
Factors to Consider When Investing in a Fixed Deposit
Whether a fixed deposit scheme is a good investment option for you depends on multiple criteria, you must evaluate a scheme on:
|
Factors |
What FDs offer |
|
Financial Goals |
– Short-term or long-term investment – A regular source of income or lump sum on maturity |
|
Risk Tolerance |
Low-risk investments with a fixed interest rate |
|
FD Interest Rates |
Competitive – higher than a savings account |
|
Liquidity |
– Has a lock-in period – Penalty on premature withdrawal |
|
Tax Implications |
Interest earned is taxable |
|
Interest Payout |
Monthly, quarterly, annually, or at maturity |
Why a Fixed Deposit Can Be a Good Investment Option for You
Fixed deposits can be a good investment option because of the following features they offer.
- Guaranteed Returns
Fixed deposits offer assured returns as the FD interest rates remain fixed over the specified tenure, unlike market-linked investments such as mutual funds which are subject to market conditions.
- Attractive FD Interest Rates
FD interest rates offered are often high compared to those offered by regular savings accounts. You can also choose the interest credit frequency – monthly, quarterly, half-yearly, or annually.
- Flexible Tenure
Banks offer flexible tenure options for fixed deposits, from as little as seven days to as long as ten years. You can open an FD online according to your financial goals and objectives.
- Premature Withdrawal
Many fixed deposits offer premature withdrawal, albeit with certain penalties. This unique feature provides a safety net if you need to access your funds before maturity.
- Tax Saver FD
Investors looking to save on taxes while earning attractive FD interest rates can opt for the Tax-Saver Fixed Deposits. These fixed deposits come with a lock-in period of five years, and offer tax benefits under Section 80C of the Income Tax Act 1961. You can claim a deduction of up to a maximum of INR 1.5 lakhs per annum.
How to Open an FD Online
Nowadays, the application process of applying for a fixed deposit is 100% online. You can open an FD online in just a few steps:
- Register on the bank’s website using your mobile number.
- Provide PAN and Aadhaar Card details.
- Fill in your personal details and the principal amount you wish to deposit.
- Complete video-KYC
- Get confirmation from the bank
That is how easy it is to open an FD online. Alternatively, you can go to the bank and open your FD offline.
Should You Invest in an FD ?
Fixed deposits remain a good investment option for individuals seeking safety and stability in their financial journey. They offer predictability, simplicity, and a lower risk profile than many other investments.
However, whether FDs are a good investment option primarily depends on your risk appetite and financial goals. If your priority is capital preservation and stable returns, fixed deposits can prove to be a suitable choice.
