Investments play a crucial role in securing our future. They let us achieve our monetary objectives on time. They are also helpful during financial emergencies. Owing to such benefits, banks provide customers with specific investment facilities readily.
Of them, a popular one is a Fixed Deposit. It is a Term Deposit that allows you to save money. It lets you invest a sizeable amount at a fixed interest rate. This way, you receive a lump sum at the end of your plan tenure. With time, this simple yet highly strategic scheme has become to go-to option for many individuals. Here are some reasons that explain why:
- Attractive interest rates
The best part about an FD is its attractive interest rates. Once you start depositing in an FD Account, you receive a specific rate of return. Banks usually publish the structure of it on their website or brochures. This way, you know precisely how much interest earnings to expect. If you do get stuck, you have facilities for assistance. For instance, most banking portals provide a Fixed Deposit Calculator to let you estimate the returns.
- Loan facility
During a financial crisis, you feel compelled to use your savings. But when you own an FD, you do not face such a dilemma. It serves as a dependable financial instrument in such times. It offers a Loan facility that allows you to take a Loan up to 95% of the FD amount. The percentage, however, varies between banks.
- Flexible tenure
Unlike other investment options, FDs come with flexible tenures. It is up to the deposit holder to decide how long they want to remain invested. They can also redeem the FD or extend it if need be. So, you need not worry about complying with inconvenient tenure terms.
- Easy liquidity
An FD Account offers excellent liquidity to its holders. You can withdraw your deposits as and when required. The process becomes simpler if you apply for an online FD. It barely takes any time, thanks to online services.
- Tax benefits
Under 80C of the Income Tax Act, FDs are exempted from taxes. You can also claim a deduction despite the interest earned being tax-free. For example, you could claim a tax deduction of up to Rs. 1.5 lakh for the amount invested.
- Free of market risks
Most investment outlets involve market risks. However, an FD Account is not market-led. It is safe, reliable, and easy to follow through. Hence, it serves as a viable option for risk-averse investors too.
- Instils financial discipline
Having financial discipline is imperative for strategic wealth-building. This account lets you follow a disciplined investment habit. Its appealing interest rates urge you to sustain financial hygiene. It also encourages you to take accountability for money management. So, open one now through the Banking app or other online mediums.
