If you are looking for a safe and secure investment for your future then there is no better choice than the fixed deposit scheme as they involve the least amount of risk as compared to any other lucrative form of investment. No matter how safe fixed deposit scheme may look, without a strong strategy you may not be able to maximize your earnings with it, thus you must consider factors to build a strong fixed deposit strategy.
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Why Open A Fixed Deposit?
Fixed deposit is considered to be an ideal investment platform those willing to keep their money at minimum risk with assured returns in the long run. With fixed deposit the investor gets the option to access their funds required to meet emergency expenses on a short notice. Now a days, applying for a fixed deposit account, getting it approved and then managing it has become extremely hassle free and one can do it from the comfort of their home.
While it is easy to understand that fixed deposit is a secure and profitable investment, one should also look into the factors that help in making a beneficial fixed deposit strategy.
Stay Attentive When You Start Your FD Account
Fixed deposit comes with both short term and long term investment option, while you have a choice to pick the one that you find suitable you should always keep your financial goals in mind while making the selection. With fixed deposit scheme, the investor gets an option to lock in their money for a certain period of time with a predetermined interest rate. The pre-fixed interest rate ensures that you will get a return at the maturity, thus you do not have to check the growth of your fixed deposit account every now and then. It will be best if you just forget about the FD until the time it gets matured. Say, you want to open a FD account with Rs. 1,00,000 for 5 years with a fixed rate of interest at 8% p.a. Once you go ahead with your choice you will not get any option to make changes to it till the time it gets matured. Any kind of fluctuation in the fixed deposit interest rate during that period will have no effect on your existing FD.
Term OF Your Deposit Can Maximize Interest
When it comes to fixed deposits, event he two to three year tenure is considered a long term investment. However, the changing financial scenario and the expected decrease in the FD interest rates have made it prudent to not keep your fixed deposit tenure any less than 5 to 7 years. It will be great if you can just keep the anticipated future interest rate market for the fixed deposit while finalizing the tenure of your investment. As the current rate of interest in FD is lower, a shorter investment plan will give you less return in your investment, which means you will be forced to make an investment at comparatively lower interest rates.
Learn About The Taxation Rules Apply On Interest Earnings
As per the income tax law, any earning that you are making from the interest received from your fixed deposit is deemed taxable depending on the income tax slab of the investor. No special treatment is provided to the interest earning from fixed deposits, furthermore the lending bank you have chosen for fixed deposit is required to deduct 10% TDS from your fixed deposit interest income it if exceeds Rs.10,000 in a year. To avoid being taxed for your interest earning, you can consider dividing your investment between two or more banks to have multiple fixed deposit accounts.
Check Interest Rates With Various Lenders
The FD interest rates for each lender vary, which means you should check the FD interest rates of a few lenders before deciding on which lender is most profitable to have a FD account. However, the interest rates they offer vary depending on their liquidity, the term selected for the fixed deposit and the interest rate offered by their competitors, thus it is important to keep all the factors and possible choice in consideration before finalizing the lender for fixed deposit.
Final Word
If you keep these four simple things in mind while planning your fixed deposit investment you can generate maximum benefit out of your money while keeping it safe for as long as you wish to. There are several banks and NBFC’s that offer fixed deposit scheme with varied interest rates which you can check either directly on their website or refer to a website like Paisabazaar where you can find interest rates for fixed deposit for all premium banks and NBFCs and compare the return on your investment as well without moving from one website to another.
