A fixed deposit is a financial instrument where an investor gives a certain sum of money to a bank or a financial institution(company) and the entity pays interest for the duration of the deposit. The rate of interest paid varies depending on the amount and tenure. Investor’s, especially conservative investors, prefer to open fixed deposits as it is a safe investment option and it can be opened easily and quickly.
The reason why fixed deposits are an ideal form of investment are as follows:
Unlike investment in the stock market or commodity market, fixed deposits are not a risky investment as they do not depend on fluctuating market rates. Investors can rest assured that his investments are safe and he will be getting back a guaranteed amount at the end of the tenure.
The amount that is invested in fixed deposit can be withdrawn at any time for a small penalty. The investor may have a financial emergency to meet financial needs during marriage, sickness or when his business is in loss. The penalty is less than that of selling stocks or real estate as the asset cannot be sold easily because of its high value and if you are in a distressed situation, you will sell it for a much lower rate. Whereas, fixed deposits can be withdrawn at any time and all you lose is a certain interest income.
Flexible in nature:
Fixed deposits can be taken for a tenure of 1 month or 1 year or 10 years based on your needs and for whatever amount that you can invest. Fixed deposits can be invested for a tenure of your choice. If you have planned for a big event in 5 years, then you can have a fixed deposit kept for 5 years to meet your financial requirement in 5 years. You can have various fixed deposit accounts to save for different goals.
Fixed deposits require you to keep the amount for a certain period to accumulate the said interest amount. This encourages the saving habit of an individual. He will not be tempted to spend the money and find a way to manage his finances more efficiently.
The interest rate offered on fixed deposits are higher than that on savings account. It is also a safe form of investment where returns are guaranteed.
Flexible interest rate pay-outs:
Interest can be paid at different intervals depending on the term you choose. Interest rates are paid at maturity, annually or monthly. Monthly and annual interest rate pay-out ensure that you have the extra income flow and can be reinvested for higher maturity benefits.
Things to consider while investing in fixed deposits:
When you are investing in fixed deposits, it is wise for you to invest with different providers. This way you won’t have to break one entire deposit in case of emergency and provides extra security for the amount as your amount will be insured. The premature withdrawal penalty will be paid for a smaller amount while the rest of the money can keep growing.
Fixed deposit investments can be laddered for different tenures. For instance, if you have Rs.4 lakh, split the amount in four deposits of Rs.1 lakh each for one, two, three and four years. When the one year deposit is matured, reinvest it for a different tenure depending on new interest rates. This will balance out the highs and lows in the interest over a period of time. It will also ensure liquidity as you have deposits maturing at different times.
Make sure that you chose the right tenure as you also have to consider the lock-in period and if you are withdrawing the amount before its tenure, then the returns are lower.
The income earned on the deposit that you have taken in the name of your spouse or your child will be clubbed with your income for tax purposes.
Ever wondered why Fixed Deposits (FDs) are still going strong? Even though other investment instruments like equities, real estate, mutual funds etc offer higher returns, FDs have held their own. Let us take a look as to why FDs are still going strong in the financial market. FDs which are also known as term deposits offers assured returns as the interest rates are higher than those on savings account. One can choose the pay-out frequency in FDs as well as withdraw the invested amount in the case of emergencies. Other benefits that comes with term deposits is that it allows to save a substantial amount as well as save taxes. With different kinds of FDs offered by banks operating the market, it is no surprise that investors turn to FDs more often than not.
1st January 2018
NRE deposits offer best tax benefits
When it comes to Non-Resident Indians making investments in India, the tax angle always comes into picture and it can often get messy. One among the best tax-free investments in India is an NRE account.
When it comes to an NRE term deposit, the interest earned is free from tax and tax need not be paid for two years after the account holder comes back to India.
Another good way of saving tax is to make investments in fixed deposits in the name of the spouse or children. This is if the family members are residents in India.
6 November 2017
FD Deposits of a high amount used for development work in Mumbai :BMC
The BMC has said that all fixed deposits amounting to a high amount to the tune of Rs.61,510 crore kept in numerous banks will be used only for city development projects. Corporators from various parties had said that the money should not be used for any purpose other than for Mumbaikars instead of burdening them with hikes. Sanjay Mukherjee, the Additional Municipal Commissioner said that these funds would be used purely for development purposes.
According to civic officials, BMC makes provision of large scale for capital works in the budget and takes a year or more for these works to be completed. Delay in procuring no-objection certificates, permissions from departments such as railway, forest and environment occurs frequently.
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I am doing Fixed Deposit with ICICI BANK and its been around 5years. They haven't been paying good interest and its more or less same like other banks as I used to hold my salary account with ICICI, I have decided to be with one bank. There is no locking period and its flexible. They do give good support and the app is user friendly. Even deposit account can be opened through i-mobile or net banking itself.
I had a Fixed Deposit in State Bank of India, I have completed the tenure before 3months ago. I have no issues with the customer service. They are given me 7% interest rate for 2years. There is no profit and processing fee. I got an online access, where I can check the interest rate anytime on the YONO app or else SBI online.
I have invested some money through FD. My salary account is in SBI so i have a zero ATM charges and the limit is not actually set by SBI. They do have short term FDs which is pretty good. I have invested the money of Rs. 60000 and the interest rate is 10.01% for the tenure period of 16 months. There is no lockin period. There is no hassle to getting the money back.
I have invested the money in Dena bank through Fixed deposit and the growth is not that much good. They are not taking any hidden charges. Only because of the Government undertaken bank, i have selected them. They are providing a interest rate of 6% per annum. I have invested the money of Rs. 2 lakhs. There is a lockin period of 1 year.
I have opt for fixed deposit for the tax saving purpose because I have chosen five years tenure with AXIS Bank, still its going on. Only once I Invested my money it has the locking period of five years. I have option to check my transactions through mobile app. But I have concern about the interest rate is very lesser for this FD.
I had fixed deposit with SBI then I withdrawn the amount, I done Rs. 3 lakhs of investment on my daughter name then I taken the liquidity to purchase the land, at the time I struggled a lot to take that money because the process was difficult to withdrawn the money after seven months of tenure.
I had a Fixed Deposit with Union Bank of India and its closed 18 to 19 months due to personal reasons. I am doing investment but my experience is not good with FD account. In my home town, there is no other banks so just decided to go with this bank. The returns are good.
I have one FD with HDFC, I deposited Rs. 1 lakh, I was opt for 45 days of tenure. Finally I got 6.25% of interest for 45 days. It won't cover the tax, if we need tax benefits we should go for five years term. I can track the details through netbanking, on the maturity date the amount credits automatically in the account. Even the notification can customized.
HSBC staff wrongly pre closed my fixed deposit .. and calculated the interest rates wrongly and when asked them for clarification never got back .. even after following up with them repeatedly for more than 3 months.. would highly recommend not using their services.
Was this review helpful?
A V kumar
Reviewed on Aug 24, 2019
I do have a Fixed deposit account with SBI and it was carried out by Mom and even I have account for my daughter. Its still running and they have Google application separately to access online. The returns are good. I am doing monthly investment and it was opened quite a long may be 4 years.
I just opened a Fixed Deposit with ICICI BANK and have not done any survey on this. I am account holder with them so it was easy to do FD account even they are providing 7% interest rate. The process is very user friendly and never faced any hassle. I could access this account via online.
In post office rate of interest is higher for the fixed deposit when compared to the bank, I invested Rs. 5000 on monthly basis its comes in a year Rs. 60,000 after 5 years I got Rs. 3.75,000 I got Rs. 75,000 extra. The service is not comfortable if we have any relative who working there it would supportive or else difficult.
I have FD with SBI, I have opt for one year term there is no such limitation for depositing the money. The interest rate is good for the FD, the online banking is convenient to take liquidity. They resolve the queries on time. Its most safe and secured.
I have selected state bnak of indis fixed deposit amount 1 lakhs , Tenure 5 years and Rate of interest 8 percentage after renewal fixed deposit 6 percentage is very less .while document directly bank . Customer service is not good and responsive.
I activated FD account with Kotak, I have been maintaining this account since when I opened saving account, I converted Rs. 5000 for one year. They are providing interest around 7.6% per annum, the online netbanking and mobile app is very convenient for deposit to FD.
I have invested my FD with ICICI BANK and also have a 3in1 account with them. The interest rate is pretty good. Recently started before 6months, I can do premature withdrawal and also have selected a locking period of 3 years. The customer service is good and overall am satisfied with this bank.
My Post office branch is located in own campus hence there is no queue. I opened the fixed deposit, I made one time investment for five years its has tax exemption. They are providing 7% of interest for per annum. I believe it has online access as well.
Chosen my fixed deposit from State bank of India. I have invested the money of Rs. 57000 and SBI is a most popular bank all over the India and offering all the facilities compared to bank. Since i have a salary account with them, its easy to transfer the money. They are providing the interest rate of 6.5%.
Union of India fixed deposit is same as other investment. Being an existing customer I have opt for one year of fd, the online banking feature is good to open and closing the account, they was no charges for the liquidity of fund before the maturity.
Chosen my fixed deposit from state bank of India because the given rate of interest is high. They are not deducting any service charges. I have invested the money of Rs. 1 lakhs and there is no lockin period and i have chosen the plan for 1 year and they are giving a interest rate of 6.75%.