Fixed deposits, in India, have traditionally been the most preferred investment choice. One of the biggest benefits of fixed deposit (FD) is that there’s very low risk involved while the returns are guaranteed. Since a fixed deposit is not a market-linked instrument, volatility doesn’t come into play at the time of payback. A fixed deposit is the best choice for those who have little knowledge of the capital market.
Here are some of benefits of fixed deposit.
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1. Safe investment and guaranteed returns
Fixed deposits are probably the safest investment instrument in the market. Unlike other investments like stocks and mutual funds, fixed deposits are not market-driven. You will be provided with a fixed rate of interest at the time of making the investment, which will remain constant all through the tenure. In the case of company FDs such as Bajaj Finance FD, high stability ratings from reputed credit rating organizations such as CRISIL and ICRA, assure you of guaranteed returns, irrespective of the fluctuations in the market. If you want to know how to calculate fixed deposit interest, you can use an online FD calculator.
2. Encourages the habit of savings
A fixed deposit promotes the habit of savings among retail investors. Not many people excel in the habit of savings. Since a fixed deposit scheme doesn’t involve any major risk, people are less hesitant to invest. That aside, with the availability of instant liquidity in the form of loans against FD or premature withdrawal of FD, the investor gets a sense of satisfaction. The money is safely marked and can be used in case of an emergency.
With the Systematic Deposit Plan from Bajaj Finance, you can easily invest in an FD scheme on a monthly basis by making small monthly deposits starting from Rs. 5000 per month. This scheme is ideal for new jobbers and early savers.
3. Higher interest for senior citizens
FD interest rates for senior citizens are higher than the regular rate. This practice is adopted by almost all banks and non-banking finance companies (NBFCs). Fixed deposits from Bajaj Finance offer a maximum interest of 7.35%. Senior citizens earn an extra 0.25% over and above the promised interest.
4. Interest payment flexibility
The interest that you earn on a fixed deposit is paid either cumulatively or non-cumulatively. The cumulative option leads to a buildup of your interest on which you earn a further interest because of the compounding effect. The entire amount is paid at the time of maturity. Non-cumulative interest, on the other hand, is paid off at regular intervals as chosen by the investor. The payment frequency in the latter case is usually monthly, quarterly, half-yearly, annually.
5. Flexibility
Fixed deposit is a highly flexible investment option which gives you an option to avail flexible tenors ranging from 12 months to 60 months (in case of Bajaj Finance FD) and the frequency of periodic interest payouts as per your convenience.
6. Easy account opening
Opening a fixed deposit account is very easy. You just have to furnish your identity proof, address proof, and a few other Know Your Customer (KYC) documents and the account can be opened within minutes. These days, with increased internet penetration, you simply have to fill up an online form to open a fixed deposit account instantly. Moreover, you can earn an additional interest rate benefit of 0.10% if you choose to invest online in Bajaj Finance FD.
While market-linked instruments like stocks and mutual funds have witnessed negative returns in the recent months, FDs have still managed to retain their popularity owing to high interest rates.