A fixed deposit is one of the safest and surest investment instruments provided by banks. It provides investors with a good interest rate, gauranteed returns, and other benefits like liquidity, safety, etc. Read on to discover all the benefits of an FD.
A fixed deposit
is one of the safest and surest investment instruments provided by banks. While there are many other investment routes out there, this traditional instrument still stands as one of the best choices among most investors. Here are a few reasons why:
1. Guaranteed Returns
Unlike other forms of investments, FD accounts are not influenced by market dynamics. This is the primary reason why they are considered a safe investment option. Investors can be rest assured that, their hard-earned money will yield good returns, depending upon the rate of interest rate offered by the bank.
Moreover, it proves to be of great help when you have set financial goals since you know how much your money will grow within a certain period of time.
2. Good Interest Rate
Another prime reason why a fixed deposit is so popular is that it offers good interest rates. The FD interest rate
is usually better than savings accounts
. The FD rate of interest for senior citizens is also higher as compared to other investors.
3. Easy to Invest In FD
You can invest in a fixed deposit without any hassles. All you need to do is fill in and submit an application form along with the payment. You can open an FD account online from the comfort of your home or simply visit your nearest branch. You even have the option to invest in multiple FDs at once, by opting for the multi-deposit facility.
4. Easy to Monitor
Since the FD interest rate remains constant throughout the tenure, you need not monitor its performance regularly. However, you need to keep an eye on its maturity date. Some banks also offer auto-renewal facility. With this facility, the bank will automatically renew the FD when it matures.
Note: If you have opted for auto-renewal, you can modify the command before the deposit matures.
5. Allows Premature Withdrawal
FDs can be withdrawn as and when needed. Although you will be charged a penalty, you will always have a sum of money to depend upon.
6. Offers Nomination and Sweep-in facility
Fixed deposits offer a nomination facility. You can provide the nomination at the initial stage itself while opening the FD account. However, as an account holder, you have the right to change the nomination at any time as per your convenience.
You also avail the sweep-in facility. With a sweep-in facility, you don't have to worry about having insufficient funds in your account for a transaction or face the embarrassment of a cheque bouncing.
Since ages, fixed deposits have been the go-to investment product for most Indians. Highly versatile and flexible – this financial product helps you create a habit of dedicated savings.