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  1. 5 advantages of having a fixed deposit account

5 advantages of having a fixed deposit account

Fixed deposit is a financial instrument that pays a fixed rate of interest until a given maturity date. FDs provide investors with a higher rate of interest than a regular savings account and also have many other advantages which make them a preferable option for investment.

By: | Updated: January 2, 2017 4:09 PM
savings account, fixed deposit, 7%, 8%, liability, investments Investment in fixed deposits gives you an assured return. The returns are generally over and above the returns offered by a savings bank account.

Fixed deposit is a financial instrument that pays a fixed rate of interest until a given maturity date. FDs provide investors with a higher rate of interest than a regular savings account and also have many other advantages which make them a preferable option for investment. Here we are taking a look at some advantages of having a fixed deposit account:

If you are new to investments, then start with opening a fixed deposit account. You can either visit your nearest bank branch or directly login from your net banking and get your certain amount fixed for specified tenure sitting at your home itself. FDs are the first instrument which helps you in creating a habit of dedicated savings.

Returns are assured:

Investment in fixed deposits gives you an assured return. The returns are generally over and above the returns offered by a savings bank account. However, returns vary as per the tenure of investments. Currently, banks are offering returns ranging from 7% to 8% as per the tenure. Make sure you don’t break the FD in between because it may affect your returns due to premature withdrawals.

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Provide flexibility:

FDs provide you with the flexibility of fixing your money over a period of time. Yes, fixed deposits come up with n-numbers of tenure duration which ranges from 7 days to 10 years. However, every bank has their own tenure criteria but nevertheless you can go for an FD in any of the banks, whether you hold a bank account or not. Choose what suits you the best, other than going into the trap of premature withdrawals.

FD Rates

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Risk managing instrument:

Some of the instruments can give you higher returns but are volatile in nature, like mutual funds, gold ETF’s, ULIP’s, etc. Therefore, it becomes necessary to invest in debt instruments to adjust the market risk. FDs are the best in managing that kind of risk when you are planning for long-term financial goals of your life.

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Helps in liability crunch

Sometimes liabilities arise due to uncertainty and you may have an urgency of having cash at that point in time. In those conditions, you can take a loan against your fixed deposits. There is no such rule of percentage offering by banks. However, banks mostly give loans ranging from 60% to 90% of the deposits. Banks can even give a higher amount, but then the interests charged are higher in those cases.

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