What Makes Fixed Deposits a Sensible Investment Tool?

What Makes Fixed Deposit as a Sensible Investment Tool?

There are many investment options that you can see, making their presence felt in the Indian market. Yes, you have guessed them, right! They are equities, real estate, and mutual funds which have become popular, especially with the younger generation due to a higher capital appreciation!

But, after having said that, despite the availability of the discussed investment options, fixed deposit still rules the roost when it comes to winning the trust of its investors.

Another reason for fixed deposit not yet failing is that they not only offer a higher interest payout but even have their ROI is fixed. It means you get what was promised, and there are no threats to the money as fluctuating market conditions do not influence its return.

Hence, fixed deposit investment is an ideal tool which may offer a steady growth to your investment with assurance and without hassles.

Let’s provide some benefits of the FDs which will convince you that they could be relied on to gain much more out of your money and see it grow over time.

You get sure-shot returns.

Fixed deposits can offer you nothing but a sure-shot return on your investments. As market conditions do not impact your invested money, you get nothing but the promised ROI at the end of the tenor. You can also use an FD calculator to know the exact ROI that you will get at the end of the tenor.

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Your investment is safe. 

Regulated by the Reserve Bank of India (RBI), bank’s FDs are insured up to Rs.1 lakh in case if your service provider fails to provide you with the promised ROI. Even non-banking finance companies (NBFCs) offer a layer of safety to its FD schemes. The FDs are marked safe with CRISIL’s and ICRA’s ratings.

You can use the FDs for funding the emergency needs.

Life may throw situations which may demand money. If you don’t have alternative sources of money, you can always go ahead and break your fixed deposits. Yes, by paying a small penalty, you can utilize to cover your needs easily. In short, FDs offer a great degree of liquidity. However, if you are breaking your fixed deposits prematurely, you will need to know that you won’t be getting any promised interest payouts.

You can apply for a loan against FD.

If you don’t want to break your fixed deposits prematurely, and yet want to grab your promised interest payments, you can always apply for a loan against the fixed deposit. Yes, a loan against FD is a possibility and lenders can allow you a loan of up to 90% of your invested money. In such a loan, the invested money is kept as the security which is utilized by the banks or NBFCs as recovery amount if you fail to repay the loan.

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You can see your money grow. 

When it comes to the FD, the concept is simple to understand – the longer you will invest your money, the higher dividend it will fetch. Though a bank’s FD is available even for a paltry seven days, its ROI is not that good! Thus, if you want to see your money growing so that you can use it against your needs, put in an FD for at least 3-5 years.

The Bottom Line

Now that some of the incredible aspects of the fixed deposit are at your disposal, it would be good to apply for it online and begin your investment journey! All the best!

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