Achieving your financial goals is crucial for realising your dreams as well as for securing your future. You may want to save for a vacation, buy your dream car, purchase a home, or fund your child’s education. In such cases, you can conveniently save towards your goal using a Fixed Deposit. An FD is a popular investment instrument that banks offer.
It has long been a favoured investment option due to its safety and steady returns. FDs are also reliable and offer steady returns. Let us understand more about an FD and explore its various advantages.
Overview of an FD
An FD lets you deposit a lump sum amount with a bank for a pre-determined tenure at a fixed interest rate. At maturity, you receive the invested amount along with the compound interest. You can also choose to get your interest periodically, i.e., on a monthly, annual, quarterly, or half-yearly basis, based on your preference.
Advantages of an FD
The essential benefits offered by a Fixed Deposit Account include the following:
- Align them to your goals
An FD enables you to select the tenure of your investment, which could range from a few days to five years and above. This adaptability lets you align your FDs according to your financial goals and timelines. For example, to fulfil your short-term goals, like buying a new gadget or saving for a vacation, you could opt for an FD with a shorter tenure.
Suppose you want to fulfil long-term goals like paying for your child’s higher education. In such a case, you might need to select a longer tenure when opening your FD online using a Banking app.
- Suitable for conservative investors
An FD remains unaffected by fluctuations in the market and offers the benefit of stable returns on the investment. This stability is essential for conservative investors looking for capital protection.
- Offers assured returns
The FD interest rates are fixed at the start of the deposit and are not affected by fluctuations in the market. Hence, you get assured returns once the tenure of your FD ends. This also lets you clearly understand the returns you will receive at maturity. This predictability enables you to plan your finances effectively. It also helps you set realistic timelines and goals to fulfil your financial objectives.
- Offers tax deductions
When opening an FD online using Mobile or Net Banking, you could choose from a variety of FDs. One of them is a Tax-Saving FD. This FD offers tax deductions u/s 80C of the Tax Act of 1961 up to a specific limit. Hence, an FD could assist you in optimising your tax liabilities while growing your wealth.
Conclusion
An FD is a time-tested investment option that offers multiple advantages. Besides, opening an FD online could provide you with a safe avenue to grow your money and help you achieve your financial goals.