An FD or fixed deposit is an investment instrument that has become increasingly popular owing to its security and reliability. The kind of guarantee a Fixed Deposit Investment by a reliable bank can offer is unparalleled. It provides a constant rate of return not subject to market fluctuations, guaranteed returns, flexibility, safety, and liquidity. An FD would be a good choice for those who don’t want to put their life savings at risk.
This traditional instrument of investment is offered by banks and NBFCs and continues to remain popular across all age groups of investors.
Here are a few reasons why you must invest in an FD.
Accessible credits against fixed deposit
An FD acts as collateral when one is in immediate need of funds. You do not need to break into your savings and let your money grow parallelly. You have the option to take a loan against your FD, which acts as a security for the lender.
Flexibility in terms of tenure
You can open a fixed deposit for a period that suits you the most. It can be a short-term FD starting from seven days and going up to ten years.
Fixed Deposits bring down the overall portfolio risk
Most other investment options, such as gold, mutual funds, securities, stock market, and SIP, are subject to volatility. Any change in the market, positive or negative, will impact your investment. Fixed Deposits lend stability to a portfolio because they promise guaranteed returns. It offers a stress-free investment experience.
Fixed deposits offer Guaranteed Returns.
Unlike other types of investments, FDs are not predisposed to market dynamics. Safety and security are the primary reasons FD is a chosen investment option. Investors know that their hard-earned money will produce good returns. Despite how the economy performs or the decline in interest rates, you will get your returns as per the agreed interest rate when you open your Fixed Deposit.
Fixed deposits help in better financial planning.
Based on the bank’s rate of interest, you can calculate exactly what you will get after a certain period. This precision and knowledge about your money’s exact growth give clarity when you set financial goals. Some goals can not wait, such as admission into college, and some goals have a pre-defined amount within a specified time frame – an FD is a perfect option for such pursuits.
Fixed deposits have a good Interest Rate.
A fixed deposit offers reasonable interest rates, typically better than savings accounts. This interest rate is even higher for senior citizens, making it a go-to option to grow their savings. IDFC FD interest rates are at an all time high, so it’s a good time to invest.
Flexibility to withdraw funds
If you are faced with a medical emergency or financial emergency, you have the option to withdraw your fixed deposits even before the tenure. The bank may charge a nominal penalty, but the withdrawal process is simple. This kind of flexibility is needed when you are faced with something unforeseen.
Easy to Invest In and monitor FDs
Banks like IDFC FIRST Bank have made opening a fixed deposit and monitoring it very easy. You no longer need to physically visit a bank and can do everything from the comfort of your home. You can even invest in more than one Fixed Deposit at IDFC at a time and opt-for auto-renewal facilities if it suits you.
Fixed deposits are one of the best options for short-term and planned goals where the amount needed is known to the person. Its reliability and guarantee deem it a great investment instrument.