Is FD a Good Investment?

You may want to know if FD is really a good investment but the secret to financial stability is a healthy habit of savings and investment. If you are thinking that investment is merely for investors or bankers, you have might have missed out on some of the more accessible investment alternatives.

Contrary to equity share investment and real estate investments that require meticulous analysis and research, investment options such as Fixed Deposits offer you a simpler option to invest your surplus funds to earn interest income.

What are Fixed Deposits?

Fixed Deposits or FDs are a term deposit investment option provided by banks and NBFCs that allow you to deposit your surplus wealth in a fixed deposit account. You funds are returned at the end of the tenure with added interest as income.

Benefits of FD

Following are some benefits of Fixed Deposits (FD) everyone needs to know.

Guaranteed Returns

Out of all the investment options available in the market currently, FDs can be considered as one of the safest investment alternatives. FDs have been the most preferred investment options as they provide assured returns in a short amount of time. Also, if you want to safeguard your investment in FDs, check for the credit rating given to the FD by Crisil or ICRA.

Flexible Tenure

When you invest in FDs you are not forced into a long lock-in period, and you can choose the amount of years that you want to invest for. While you can earn more interest if you invest for a greater number of years, you can also earn a sizable amount of interest in a single year. Another option that you can opt is to ladder your FDs on an annual basis to gain the most out of your investment.

Helpful for Emergency Expenses

Some people are under the misconception that if you have parked your funds in an FD, you cannot use them for emergency purposes. If you have emergency expenses, you can either withdraw the money invested in the FD (there might be some amount of penalty for premature withdrawal) or you can get a personal loan against the FD, which you can repay after you get the amount back from the bank or NBFC. Some of the financial companies also allow you to partially withdraw the FD amount without a penalty.

Easy to Avail

While investment in share markets require you to open a demat account and real estate investments require legal proceedings, you can invest in FDs in an extremely easy manner. You can access the online portal of the bank or NBFC and even pay the amount through online payment or account transfer. Furthermore, the document requirements for investing in an FD are not very stringent.

High Interest Income

There are investment options that give higher returns, but they either come with great market risk or take a long time to provide returns. Compared to that, fixed deposits can return your invested amount in 1 to 5 years with an interest rate that goes up to 8.75%. NBFCs such as Bajaj Finance also provide you an FD interest rate of 9.10% if you are a senior citizen.

Source of Regular Investment

If you prefer getting your returns on at the end of tenure but on a regular basis, you can opt for monthly, quarterly, half-yearly, or annual interest pay-out to cover your day-to-day expenses through interest income. You can track your investment income efficiently through an FD calculator as well.

Considered the wide range of benefits that FDs provide, it is certainly a good investment for people who prefer their investments to have assured returns and flexibility.