A Fixed Deposit is an instrument that helps in growing a lump sum of money over a fixed period of tenor and a fixed interest rate. They are high-interest-yielding term deposits and are commonly offered by various banks and non-banking financial companies in India. The interest rates offered on fixed deposits do not change, despite the market fluctuations, and are normally high. According to some reports, the FD rates in 2023 are expected to experience a hike. Fixed Deposit is a conservative investment option and one of the most popular methods of money investment in India due to its myriad benefits.
Security and low-risk
Fixed Deposits as compared to other investment options are relatively safer. The market fluctuation does not affect the interest rates. They continue to be the same. It is often considered as one of the most suitable investment options for people who are interested in good stable FD returns in India without exposing themselves to the volatile risks of the market. Fixed Deposits are risk-free as they offer to assure returns. They potentially have no risk on one’s investment which makes it a popular choice.
Availability of Overdraft facility
The bank customers are often given the option to take overdraft facilities against their fixed deposits. This makes Fixed Deposit a lucrative investment option as one can meet their need of sudden demand ofmoney in a situation of emergency. This facility offered by the banksoften trumps the other investment options available and thus making it a popular choice. The sanctioned amount is usually close to 70% of the amount of the fixed deposit and is offered at a competitive rate of interest. The FD returns in India make it a popular investment choice and such additional facilities are more of an add-on.
Investing in Fixed Deposits also offers tax exemption benefits.Several banks offer a five-year FD scheme(lock-in period of 5 years) thatprovides benefits under Section 80 Cof the Income Tax Act, 1961onInvestment up to Rs. 1.5 lakhs. The features and the terms associated with this type of account may not be completelythe same as that of a normal Fixed Deposit account. The FD interest rates for 2023 are likely to be different and might further benefit the investors.
Insurance and Health care benefits
Many banks offer several free insurance policies and health care benefits along with their investment scheme inFixed Deposits. They are mainly to attract customers however they are an additional advantage for the investors.
Ease of management
Managing fixed deposits is relatively easier. It is one of the biggest reasonsfor its popularity in India where a major portion of people are not educated and scared of investing their money in several platforms available. Fixed Deposits have become an old and trusted medium of investment. With the arrival of the internet now managing all the banking processes has become easier. Even the opening of a Fixed Deposit.Due to the elimination of the lengthy process of openingit now one caninvest in Fixed Deposits within a few minutes. Further, if there are standing instructions given then the banks will auto-renew the deposits. This makes investing in FD far more convenient than the other available options.
Benefits to senior citizens
Investors who are senior citizens (above the age of 60) get better interest rates on senior citizens’ FDsas compared to the interest that is being offered on the regular FDs. Further, with the expectation of FD rates 2023 are likely to rise it becomes an even more lucrative option.
The flexibility of investment and withdrawal
Fixed deposits can be opened for 7 days or maybe 10 years. It depends upon the desire of the investor and the rates vary for them accordingly. One can make use of a Fixed Deposit calculator to estimate future earning and then make an informed and flexible decision. Fixed deposits offer the flexibility of withdrawal and investment of funds.In case of financial emergencies, one can withdraw the funds before the date of maturity. A certain fee would be levied butthen it helps in cases of sudden need of funds.
In summary, it can be said that as a financial instrument for investment the FDs have gained an iron-clad trust of the general masses. Being a bank-based investment and closely checked by the Reserve bank of Indiathe investors are more or less generally assured of the safety of their funds and low risk.All of these benefits mentioned above have made Fixed Deposits one of the most popular choices of peoplewhen it comes to investment.