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  • Fixed Deposit BYTES FROM OUR KITCHEN

    How to Invest in FD

    Fixed deposits are among the most popular deposit schemes for Indian consumers. The high rates of interest for flexible tenures ranging from 7 days to 10 years make it the ideal solution for both short and long term investments. The popularity of FDs has only grown over the years as more and more consumers realize the potential for higher returns through this financial product.

    Fixed deposits are offered by almost every bank operating in the country, be it a private sector one or a public sector undertaking (PSU). There are also lots of other private non-banking financial companies (NBFC) that offer fixed deposit schemes to customers. NBFCs typically give better interest rates to customers, but may lack in credibility in terms of long term assured returns that is associated with government-backed organizations.

    Should I be happy with my FD scheme?

    Technically, the interest rate offered to you by a bank or an NBFC is the actual return you will get from the account. You will probably make various permutations and combinations to find the ideal deposit amount and tenure for your needs, apart from technicalities such as frequency of payouts that help in maximizing returns. You would ideally decide the product of your choice only after exhaustive research. It doesn’t look like there’s more room for improvement here, right?

    But even within fixed deposits, the interest rate should not be taken as the absolute law for returns. You can perform your own tweaks to earn higher returns while ensuring liquidity at all times - a concern with FDs seeing that premature withdrawal of accounts results in reduction of returns. Timing your fixed deposit is an important element of maximizing your returns. And the timing factor isn’t limited to finding the right tenure only – with detailed planning you can save assured returns from multiple accounts, each with different maturity periods. This is where laddering deposits come into play.

    Laddering fixed deposits – enhancing your returns

    How to Invest in FD

    Any way you look, the point of FDs is to get higher returns in a relatively risk-averse manner when compared with stock markets or mutual funds. The best returns are from long-term deposits, but these hamstring you in terms of liquidity. Fixed deposits are meant to stay invested till maturity and banks employ different charges to ensure that it stays that way.

    Laddering deposits is a way of staggering out your investment into multiple fixed deposit accounts to earn high returns, while being welcomed with liquidity at regular intervals. As the name suggests, laddering deposits is basically staggering your deposits into individual ‘ladders’, and you climb the ladder one rung at a time. Okay, this may sound complicated but it’s actually not. Here’s how:

    Let’s assume you have a lump sum of Rs.5 lakhs that you want to invest in a less risky fixed deposit offering interest at around 9% p.a. rather than a high-performing but volatile mutual fund. So, you start by timing your deposits so that you have liquidity at regular intervals. You invest Rs.1 lakh in a 1-year fixed deposit, another Rs.1 lakh in a 2-year FD and so on till a 5th fixed deposit of Rs.1 lakh and 5 year maturity. This means you have invested all the cash in 5 different fixed deposits, each maturing one-year apart.

    Next, as the 1-year deposit matures, you get a return of Rs.1.09 lakhs. So far, so good. This amount is then invested in a 5-year deposit, which effectively creates the 6th step or rung of the ladder. If you are lucky, the rates at this point of time may be something like say 10%. You do the same for the 2-year deposit, creating a 7th step and so on. By doing this, you have ensured that you will always have sufficient liquidity for emergencies without compromising your long-term deposits. Another major advantage is that you can stay on top of rate changes, by investing at the right time and ensuring maximum returns.

    Benefits of laddering deposits

    Laddering deposits offer a host of benefits not limited to easy liquidity. At the core, this method will help you stay in control of your investment at all times.

    Premature withdrawal losses reduced

    Laddering deposits will help you in reducing losses from premature withdrawal. Generally, banks will charge some extra amount when you opt for premature withdrawal. With laddering deposits you can also wait for better rates in the market to invest in. As each of the ‘steps’ matures, you can invest in some other financial instrument offering higher returns as per your risk appetite.

    Liquidity

    In the last point, you could leverage better interest rates by investing in laddered deposits. You are also empowered by liquidity at regular intervals. As shown in the example, you could ensure liquidity every one year, or even every 6 months or 4 months by laddering your deposits accordingly.

    Consistent returns

    Laddering might not help much in getting higher returns in a go, but it will surely ensure that your returns are steady. Laddering is ideal for senior citizens who have lump sum retirement funds to invest, as they will be ensured steady returns on a monthly, quarterly, or any other periodical frequency.

    A point to note here is that laddering is not a perfect science. If rates are lower one year down the line than what you are depositing for now, then you might stand to earn lower returns. However, in the long run, laddering is more likely to offer better returns, than say a 10 year-fixed deposit that comes with a clause of premature withdrawal for extra charge.

    Ideal customers

    The ideal situation where people can go for laddering deposits would be:

    • Retirees who rely on income from interests for their daily expenses.
    • People who are not too sure about long-term FD investments and want to have flexibility in reinvesting their money can opt for laddering FDs.
    • People with short-term goals like vacations or big purchases can also benefit from laddering.
    • In terms of long-term deposits, laddering will help you in preventing your investment from maturing at lowest rate cycle interests.

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    How To Invest In FDs Reviews

    • HDFC Bank Fixed Deposit
      "Excellent services"
      0.5 4.5/5 "Excellent!"
      The best bank for a fixed deposit is HDFC Bank. The customer support is good and they are responsive as well. They offer an interest like other bank on my savings. The best is there is no lock in period so I close this account when ever I want too and I can do it with just a click away online. Where as other banks they would ask me to go to the home branch.
      Was this review helpful? 1
      , new delhi
      Reviewed on Apr 16, 2019
    • review Fixed Deposit
      "Good interest on savings"
      0.5 5.0/5 "Blown Away!"
      I also have a fixed deposit with Saraswat Cooperative Bank. The customer support is good and they are responsive. I been a customer for 20 years. The interest they provide on my savings is more than satisfactory and there are no charges taken for this account features.
      Was this review helpful? 0
      , mumbai
      Reviewed on Apr 15, 2019
    • SBI Fixed Deposit
      "Less interest rate"
      0.5 5.0/5 "Blown Away!"
      Two months before I deposited my money nearly 1,50,000 in SBI . I am really happy with their customer service and response . But the interest rate is around 6.85 % which is lesser comparing to other bank . Since It is Government bank, I need not to worry in future if anything uncertain happens .
      Was this review helpful? 1
      , chennai
      Reviewed on Apr 15, 2019
    • Central Bank of India Fixed Deposit
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have done fixed deposit on CENTRAL BANK OF INDIA an year ago, i did not face any issue in creating account. They have given me limited tenure period, i use to pay my payment through my credit card of same bank, now i have withdrawn my deposit. I got good interest rate so far my experience was good.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Apr 15, 2019
    • Citibank Fixed Deposit
      "Satisfactory"
      0.5 5.0/5 "Blown Away!"
      I also have a fixed deposit with Citibank. I could get the clear details online. Though I would not be able to open this account through the mobile application. I can do it through the desktop. It has been a good experience till date and beneficial too.
      Was this review helpful? 0
      , mumbai
      Reviewed on Apr 15, 2019
    • SBI Fixed Deposit
      "Good in all"
      0.5 5.0/5 "Blown Away!"
      I also have a fixed deposit account with State Bank of India. The customer services are good. The process can be done online. The lock in period depends on the choice of the customer. The minimum tenure is six months. The interest rate provided is also equally good.
      Was this review helpful? 3
      , new delhi
      Reviewed on Apr 13, 2019
    • Bank of Baroda Fixed Deposit
      "Overall no hassles"
      0.5 5.0/5 "Blown Away!"
      It is a very simple process to open a fixed deposit account with Bank of Baroda. The lock in period is for five years. They provide a very good interest on my savings. The process at the bank is also good. There are no hassles in the overall experience.
      Was this review helpful? 0
      , faridabad
      Reviewed on Apr 12, 2019
    • SBI Fixed Deposit
      "Looking for More Investment"
      0.5 5.0/5 "Blown Away!"
      Five years before , I opened a Fixed deposit in SBI , It automatically renewed on every year. I just monitors in online . I am looking for more investment in the future. At one stage I open this fixed deposit for my children's education or marriage .
      Was this review helpful? 1
      , secunderabad
      Reviewed on Apr 10, 2019
    • Federal Bank Fixed Deposit
      "Good customer support"
      0.5 5.0/5 "Blown Away!"
      In Federal bank , for Recurring deposit they provide very good interest rate of almost 7.5% .Even it is applicable for shorter period and longer term also . Very good customer support . After comparing with other banks , I decided to start my FD in Federal bank .
      Was this review helpful? 1
      , kochi
      Reviewed on Apr 09, 2019
    • review Fixed Deposit
      "Overall good"
      0.5 5.0/5 "Blown Away!"
      I hold a fixed deposit account with City Union Bank. The rate of interest is of 7.25% on my savings. The customer support is good and they are responsive as well. It was easy to open this account and I can do it online. There are no hassles in the overall service.
      Was this review helpful? 0
      , chennai
      Reviewed on Apr 05, 2019
    • ICICI Bank Fixed Deposit
      "Good Accesibility"
      0.5 5.0/5 "Blown Away!"
      My fixed deposit with ICICI, I have opened the account through online just from the I mobile. I invested around Rs. 1 lakh its for long duration. The interest is good, I can withdraw the money through online banking without any charges. I am very fine with them.
      Was this review helpful? 3
      , indore
      Reviewed on Apr 03, 2019
    • IndusInd Bank Fixed Deposit
      "Good interst for FD savings"
      0.5 4.0/5 "Great!"
      I opened fixed deposit account through online, the process was simple without any documentation. Currently the bank is providing the interest around 8% for the FD account. I done it before year it has tenure this year one year. I think this august my Fd amount gets matured.
      Was this review helpful? 3
      , bangalore
      Reviewed on Apr 03, 2019
    • Standard Chartered Bank Fixed Deposit
      "Good service"
      0.5 4.5/5 "Excellent!"
      Hold a fixed deposit Account with STANDARD CHRATED BANK . The best thing is their Customer Service .The response of banking service and banking staff is good here . The online banking is good and the services at the branch is also satisfactory.So far it has been good experience with STANDARD bank .
      Was this review helpful? 1
      , new delhi
      Reviewed on Apr 03, 2019
    • HDFC Bank Fixed Deposit
      "Its Good"
      0.5 4.0/5 "Great!"
      I went to the bank for the FD process, the service was good they helped to open the account on the same day. I took the fixed deposit for the period of three years and I deposited Rs. 1 lakh, I would get the amount of Rs. 1.35 lakh. I do have HDFC online access .
      Was this review helpful? 3
      , hyderabad
      Reviewed on Apr 03, 2019
    • Post Office Fixed Deposit
      "Good Experience"
      0.5 4.0/5 "Great!"
      My fixed deposit got matured with Post office, the interest was nominal. The staff are good they gave me good service. There was no online option hence I need to visit for depositing the cash. I invested for five years for fixed deposit, my experience was good.
      Was this review helpful? 1
      , chennai
      Reviewed on Apr 03, 2019
    • HDFC Bank Fixed Deposit
      "Good overall"
      0.5 5.0/5 "Blown Away!"
      I have a fixed deposit account with HDFC Bank and the banking process is good. I could open this account online and the account has been beneficial too. I earn a good interest. I can also close this account without having to go in person to the bank. It can be done online too.
      Was this review helpful? 2
      , bangalore
      Reviewed on Mar 29, 2019
    • IndusInd Bank Fixed Deposit
      "Good Investment with Indusind bank"
      0.5 5.0/5 "Blown Away!"
      One time investment I have done in Indusind bank as a fixed deposit, it has locking period around one year. They are providing the interest around 8% for one year. Online option is easy to activate the service and closing, there is no charges for the FD maintenance.
      Was this review helpful? 2
      , indore
      Reviewed on Mar 26, 2019
    • Axis Bank Fixed Deposit
      "Convenient"
      0.5 4.5/5 "Excellent!"
      I have a Fixed Deposit with Axis Bank because they have offered more interest than ICICI BANK and its been more than 1.5 years. Their customer service is always good. The interest rate is around 7.6% which am not sure. I can manage the account online. I opted for 18 months.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Mar 26, 2019
    • Bank of Baroda Fixed Deposit
      "Need improvement on customer support"
      0.5 4.0/5 "Great!"
      I have done one time investment fixed investment in Bank of Baroda, it has five year of locking period. The interest is nominal for the FD, I believe BOB give the interest around 8% , however there was no proper information regarding the interest. My father have taken this FD on my name, every year I deposit the amount.
      Was this review helpful? 1
      , noida
      Reviewed on Mar 25, 2019
    • Citibank Fixed Deposit
      "Its Good"
      0.5 3.0/5 "Satisfactory"
      I have converted saving maintenance into FD account for the term of one year. I can prolong period based on my convenience, the rate of interest is average for the fixed deposit. However I have online option to open and close the fixed deposit account at any time.
      Was this review helpful? 3
      , bangalore
      Reviewed on Mar 11, 2019
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