New Delhi: Starting an investing journey can be a daunting process for some people with so many options available in the market. It often becomes hectic to adopt a perfect investment tool with such a wide range. Although, among several choices like- mutual funds, senior citizens’ savings schemes, public provident funds(PFs), and fixed deposits(FDs). The FDs are much more reliable options, which give a higher rate of returns in the long run and are unaffected by market volatility.
However, to simplify the procedure of selecting the appropriate investment options one can decide their decision based on a few parameters like
- level of risk
- monetary goals
- their age
- Income range
- Expenses and
- Liquidity necessities
Reasons to Invest in Fixed Deposits
1. It guarantees returns and is uninfluenced by the market volatility
2. Helps in achieving short-term goals as it ensures the security of the capital invested by the person as they actively earn interest on the amount invested.
3. Provides flexibility in withdrawing funds. Few investment instruments like tax saver deposits do not allow their investors to extract funds mid-way in the lock-in period, unlike fixed deposits.
4. Can apply for a loan against FD. Another thing that FD investors have the liberty to benefit from is that they can claim a loan against their FD. Though the loan amount offered depends on the bank, one can utilize instant funds without disturbing fixed deposits.
Best FDs to look out for
1. IDBI Bank Tax Saving FD- 6.10% to 6.85%
2. PNB Tax Saving FD- 5.80% to 6.30 %
3. IDFC First Bank Tax Saving FD- 6.50%
4. Axis Bank Tax Saving FD- 6.10% to 6.85%
5. HDFC Bank Tax Saving FD- 6.10% to 6.60%
Components Affecting Interest Rates of Fixed Deposits
Duration of deposits- Fixed deposits having short tenure give lower interest rates whereas longer or medium-term tenure yields higher interest rates.
Deposit amount- Higher deposit amounts basically higher than Rs 1 cr provide way too much higher interest rates.
Senior citizens oftentimes gain additional interest rates of 0.25 per cent to 0.50 per cent on their fixed deposits.
