A fixed deposit is one of the most sought-after investment alternatives in India.
Many individuals contemplate fixed deposits as the most suitable financing option and invest a significant sum of their savings in this financial instrument.
But have you ever thought about what a fixed deposit is?
A fixed deposit is a kind of financial instrument in which the deposited sum gets locked for a set period, and this term is determined by the person investing in a fixed deposit. This tenure could range anywhere between a few days to many years.
In return for securing these funds, fixed deposits pay the investor a set interest rate. Also, opening a fixed deposit account is pretty simple and, you can quickly apply for an FD account in both online and offline mode.
Listed here are some of the top benefits of investing funds in a fixed deposit.
The Guaranteed Rate of Return
The significant reason individuals favour investing their funds in a fixed deposit is the guaranteed rate of return. Once you invest a set amount in an FD account, you can be assured to get the set rate of return.
Also, many banks and financial institutions keep updating the prevailing fixed deposit interest rate on their official website and their physical bank branches to make it effortless for the customers to understand the rate of return they will get.
Moreover, to calculate the exact interest rate on your fixed deposit, you can take the help of an online fixed deposit interest rate calculator to get an accurate estimate.
The duration for a fixed deposit is quite flexible and entirely depends on the deposit holder. Also, while every bank holds its minimum duration for investing funds in a fixed deposit, the ultimate decision lies in the hands of the deposit holder. Moreover, fixed deposit holders also have the option to determine whether to extend or redeem a fixed deposit.
Fixed deposits are risk-free investments as fixed deposits are free from market fluctuations, unlike other financing tools. Also, by investing money in a fixed deposit account, you get an assured sum once the maturity period gets over. This makes it an attractive investment option for investors who are averse to investing in risk-based financial instruments.
It is relatively straightforward to liquidate a fixed deposit. Also, FDs that get booked online can easily get liquidated on the cloud platform through net banking. Alternatively, you can also fill up an application form by visiting your bank or financial institution to liquidate the fixed deposit.
Loans Against Fixed Deposit
A fixed deposit is a reliable financial instrument to hold in case of financial difficulties. Getting a loan against your fixed deposit is pretty simple, and you can receive a loan up to 95% of your FD sum, depending on the bank or financial institution.
After looking at the benefits of a fixed deposit account, it is explicit that this is a financial instrument for people who do not hold a higher risk appetite. Hence if you are the one who loves seeing set earnings in your account, this is the financial instrument for you.
Smriti Jain is the owner and senior content publisher at Financesmarti. Financesmarti is a website where she shares a lot of useful stuff for the people and business of India. This includes small business ideas and other banking information, as well. Smriti completed her education in science & technology from Delhi University. Smriti usually has interests in digital marketing now, and she has chosen this career for the full-time opportunity. The primary purpose of starting this blog to provide quality information on the banking industry to the people.