How to Make FD Effectively Work for You?

A fixed deposit is a time-tested investment that dada and dadi will always recommend. Since it is safe and reliable, many people prefer to keep their money in FDs. Although nowadays, there are a lot more investment options available with higher returns, so people have started to move away from FDs. But to be financially secure, it is always good to keep money in an fixed deposit.

An FD has so much to offer, but you should know how to get the best out of it. Here are a few tips that you can use to ensure that your FD works effectively for you.

 

Seize opportunities

 

An FD doesn’t mean you’re money is locked up for years. If you have a lump sum amount and don’t need to use it immediately, you can put it in an FD for 7 days minimum and earn interest. Rather than the amount lying idle in your bank account, you can earn better interest on it.

 

Choose the right tenure

 

FDs are available for 7 days up to 10 years. If you choose to invest for 10 years, it doesn’t mean you’ll get the highest interest rate. Generally, banks offer the highest rate for mid-term investments between 2-3 years. So, it would be wiser to invest for 2-3 years and after it matures, you can renew the FD for another 2-3 years.

 

Diversify your investments

 

If you have Rs.3 lakh to invest, it is best to split it and make different investments. Within FD itself, you can choose different banks and tenures. This will increase your earnings and your average risk also comes down.

 

Keep an eye on TDS

 

If you are earning more than Rs.10,000 in interest from deposits, then you will be liable for tax deducted at source (TDS). Anything below Rs.10,000 interest income means you don’t have to pay tax on it. If you are a senior citizen, you can earn up to Rs.50,000 interest income without being taxed.

 

Consult a financial advisor

 

Financial advisors would be able to give you the best plan for optimum returns on your money. It is advisable to hire one for a nominal fee and get an investment plan that will give you the highest returns.

If you choose to make an FD investment, it’s good to do some research before choosing a bank and which tenure you want.

FD is a safe and secure investment where your returns are guaranteed!

Toh hua na FD aapke Fyaada kaDeposit.

Learn more about what is a Fixed Deposit and how does bank calculate interest on FD

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