The Top Benefits of Saving through FD That You Need to Know

October 6, 2021 By Eden Smith

Many Indians simply open a Fixed Deposit (FD) account to save money for rainy days. Your grandparents or parents might have told you about the regular returns they get from their FDs. It is better to save money in an FD than in a bank savings account. FD is a safe investment option for many investors who are afraid of market volatility.

An FD is a way to save money and still get good returns. This decision will bring you many benefits.

Why should you invest in fixed deposits in India?

Guaranteed Returns

The return-to-risk factor is something that many investors take into consideration when planning their investments. FDs do not include phrases like “high risk, low return”. This is because FD is among the most secure investment options in India. Market-driven returns cannot be guaranteed. They are determined by the amount invested and the tenure chosen.

An FD offers a fixed return, unlike other investment options that you don’t know what you can expect in terms of returns. A Fixed deposit account’s interest rate may differ from one bank to the next. It remains the same for the entire tenure of the FD.

Encourage Disciplined Savings

It is difficult for everyone earning a living to save a certain amount of money regularly. Many people find themselves in financial trouble, whether it’s due to rising financial needs or unexpected expenses. They want to make sure they have enough money to cover future expenses.

An FD investment can help you understand the importance savings. You don’t need to be nervous about opening a fixed deposit bank account as there is very little risk. FD are highly liquid so you can easily close it early in the event of a financial emergency.

Senior Citizens Get Higher Returns

Many people strive to achieve financial independence in retirement. Senior citizens don’t want to depend on their family for their financial needs. Many senior citizens would rather have a fixed income source, so they keep a portion of their money in an FD.

Senior citizens can get FD interest at a higher level from most banks and NBFCs (Non-Banking Financial Companies). This rate is higher than the standard FD rate for individuals.

Flexible Payment Options

The two payout options available for FD investments are Cumulative and Non-cumulative. You can receive the interest earned through FD investments. The cumulative option will allow you to accumulate interest over time and receive the full interest at maturity. The non-cumulative option allows you to receive interest at regular intervals.

Select the non-cumulative payout if you wish to receive FD interest as regular income. This is what senior citizens want for their retirement.

Loan Options Against FDs

Financial emergencies can happen at any time, but they drain all savings quickly. People often turn to high-interest unsecured loans to help them deal with these situations. The repayment of such loans can be very stressful for the borrower.

A loan against FD can be used to finance your emergency expenses and avoid high-interest loans. This facility is available to all fixed deposit account holders. The interest charged on this loan is low. This means that you don’t have to worry about managing your finances in difficult times.

FD is an easy to understand investment option. You don’t need to monitor FD rates or worry about market fluctuations like with other financial instruments. To let your savings grow in an FD bank account, you can choose a reputable bank like Axis Bank.