With the economic crisis of the past and the predictable upcoming recession in the economy, the chances of hitting a financial emergency have a higher probability than ever. This, in turn, also demands to safeguard money along with the creation of wealth.
From preparing a religious budget for your monthly expenses to diversifying investments to insuring your money to getting assured returns on your investments there are various strategies that you need to follow to prepare an emergency financial kit.
Protecting your money with a Fixed Deposit:
The Fixed Deposit or popularly known as FD is one of the investment instruments which is sworn by Indian households from generations to generations. It is because of the nature of FD that people don’t overspend their money as they have limited access to their funds when they invest in a fixed deposit.
What is a fixed deposit? What are the features of a fixed deposit account?
A fixed deposit, provided by banks and non-banking institutions allows people to make a lump-sum payment and invest their money for a fixed period of time to get assured returns on their investments.
Features and Benefits of a Fixed Deposit:
- Flexible Tenure: A fixed deposit offers a flexible tenure ranging from 7 days to 10 years. Investors can choose the investment scheme as per the investment goal.
- Assured Returns: The FD interest rate is determined by the banks based on the guidelines of RBI. Thus, these investments are free from market risks.
- Tax- Benefits: With tax-saver fixed Deposit, investors can also save taxes up to Rs 1.5 Lakhs on their investments. These investments are available for a fixed tenure of 5 years.
- Liquidity: A fixed deposit does not offer you to withdraw your money before the maturity as banks charge a penalty on breaking the FD before the tenure of investment.
- Loan against FD: In case of a financial emergency, you can avail a loan against FD without breaking the FD. The rate of interest on a loan against FD is 0.5%- 2% higher than FD rates.
Why choosing FD is an excellent option to protect your money:
There are various types of fixed deposits that investors can choose as per their investment goal. If the investor wants to get a tax benefit, he can invest in a tax saver FD. On the other hand, to get liquidity benefits along with the assured returns on the investments, one can choose Flexi fixed deposits. Flexi Fixed Deposits are a type of fixed deposits that offers the benefits of both savings account and Fixed Deposit.
Along with that, there is a considerable amount of flexibility in a fixed deposit. With the flexibility of choosing the FD tenure from short term, medium-term to long-term, there is also the flexibility to opt for Interest payment as well. For instance, retired people who want to get regular income can opt for interest payments monthly. On the other hand, people who want to get high returns on their investments can choose to receive interest payments quarterly or annually.
To get good assured returns on your investments, you should invest in multiple fixed deposits of different institutions. As DIGS (Deposit Insurance and Credit Guarantee Corporation), a subsidiary of RBI provides an insurance cover of Rs. 5 Lakhs. Further, you can also save taxes on the interest received if you invest in multiple FDs.
Conclusion: A fixed deposit thus provides assured returns on your investments without any market risks. With the greater flexibility and multiple options to invest in a fixed deposit, it is an ideal choice to protect your money.
| Banks | FD Interest Rates | Senior Citizen FD Interest Rates | Tenure |
|---|---|---|---|
| Bajaj Finance | 6.90% – 7.10% | 7.15% – 7.35% | 12 months to 60 months |
| HDFC | 6.35% – 6.45% | 6.60% – 6.70% | 33 months to 66 months |
| PNB Housing Finance | 6.20% – 6.70% | 6.70% – 7.20% | 12 months to 120 months |
| ICICI Home Finance | 6.00% – 6.50% | 6.25% – 6.75% | 12 months to 120 months |
| IDFC First Bank | 3.00% – 7.00% | 3.50% – 7.50% | 7 days to 10 years |
| SBI | 2.90% – 5.40% | 3.40% – 6.20% | 7 days to 10 years |
| Axis Bank | 2.50% – 5.50% | 2.50% – 6.15% | 7 days to 10 years |
Here you can check the Top Banks & NBFCs which are offering a higher interest rate on FD. If you are interested to go with NBFC you can go with bajaj finance that offering the highest interest rate. You can also go with State Bank of India, The SBI FD Interest Rate is also decent in comparison to other Gov. Banks. SBI is a PSB and more secure than NBFCs and Private Banks.
