FD Investment Tips: In India, fixed deposits (FDs) serve as reliable, secure investment options for a long time. It guarantees fixed interest rates and therefore returns. As with any other investments, a number of important considerations become essential when investing in FDs to enhance the benefits of both safe and profitable investment. Here are some FD tips for investment:
1. Choose The Right Bank
First of all, you need to ascertain the credibility of the bank or financial institution before investing in an FD. Compare between public sector banks, private banks and non-banking financial companies (NBFCs). Public sector banks are safest but will pay much lower interest rates than NBFCs-even when you consider risk, NBFCs are much more dangerous, so pay attention to their ratings and reputation.
2. Compare Interest Rates
Different banks and financial institutions offer different interest rates. Compare the interest rates of different institutions before investing. Higher interest rates may appear in smaller banks or NBFCs; however, keep in mind their safety and credibility at the same time.
3. Choose The Right Investment Period
An FD’s tenure varies and depends entirely on the requirements of the investor. Short-term investments are best suited for 1-2 years FD. A 5-year FD is usually the best choice for long effective terms. Higher interest is generally levied against longer tenures.
4. Understand The Frequency Of Interest Payments
The periodicity of interest payments defines such FDs to be monthly, quarterly, half-yearly or yearly and creates implications for the investor. Opt for the option of monthly or quarterly payment of interest if one requires earnings at regular intervals. One might consider it better to earn via the maturity or annually if the investment portfolio is for a long period.
5. Tax Saving FDs
If you look for tax savings, visit tax saving FDs, which are on a 5-year lock-in period but qualify for tax under Section 80C of the Income Tax Act yet probably attract a lower interest rate than normal FDs.
6. Exclusive Schemes For Senior Citizens
If a person is elder, then surely by the bank he should enjoy some other exclusive FD schemes. These schemes usually are 0.25% to 0.50% higher than normal FDs.
7. Understand The Rules Of Premature Withdrawals
Anytime you can find a situation that would require, one would need to withdraw money before maturity of the FD. Therefore, elaborate knowledge of rules regarding the premature withdrawal penalty and reduction in interests needs to be understood. Some banks charge a penalty on premature withdrawal that can affect your yields on FD.
8. Go For Online FDs
Many banks nowadays have online FD facilities, which offer comparatively higher interests. It is easy and convenient to invest in online FDs and even saves time.
So, investing in FD provides a safe and secure option for investment but without proper planning and relevant information, the benefits cannot be fully availed. Keeping these above-mentioned tips in mind would consider making a better investment decision, towards wholly realizing your financial goals.
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