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Should I Invest in FD? Where to Invest for Better Returns

Fixed deposits offer guaranteed returns via interest rates that remain constant across the investment tenor. Also known as a term deposit, this investment has remained a favourite across all ages. In fact, a survey by YouGov-Mint shows that among millennials, FDs and other safe investments preferred to more volatile instruments. What makes an FD so attractive? From term deposit interest rate to risks and returns involved, take a look at why and where to invest in a fixed deposit.

Finances grow in a safety

Fixed deposits are not market linked and thereby not susceptible to its fluctuations. This means that you can forecast your returns accurately and won’t have to wake up to the unpleasant news of a market crash that has caused you to lose your capital.

In the event that you are opting for a company FD, verify that it has good credit ratings. For instance, Bajaj Finance’s Fixed Deposit offers stable investment environments, a fact which is attested to by it carrying ICRA’s MAAA and CRISIL’s FAAA rating.

Generous returns when compared to other low-risk schemes

Saving schemes gained more popularity with the recent 0.10% hike in EPF rates. However, vis-à-vis savings schemes, FDs have the potential to offer you even higher returns. To illustrate, consider the following rates currently obtainable.

  • Bajaj Finance FD:      75% – 9.10%
  • SCSS:                         7%
  • EPFO:                        65%
  • NSC:                          8%
  • PPF:                          8%

FDs help you get sizeable returns quickly by letting you earn via compound interest. You can compute your returns without error by using an FD rate calculator online.

Ability to tailor the investment to your goals

Fixed deposits offer you a range of convenient features that ensure you that you aren’t locked out without the degree of liquidity you require.

  • Flexible tenors: Financiers offer maturity tenors ranging from few days to a handful of years. By selecting the term that is right for you, you can get liquidity to meet all your financial goals be it an overseas vacation planned for 3 years in the future, or a child’s tuition fee due in 12 months.
  • Customisable payout frequencies: Interest accrued on an FD can be accessed at maturity or earned at regular intervals. Financiers offer you the option of getting payouts every month, quarter, half-year, or year. This can be very useful in case you are a senior citizen and need to foot regular medical costs.
  • Laddering FDs: A strategic way of getting frequent liquidity, laddering involves staggering your FDs over varying investment tenors. So, in case you foresee the need for finances every 12 months, set your investment tenors as 1 year, 2 years, 3 years and so on. For additional information about crypto or stocks prices visit Finscreener.

Use as collateral when faced with a financial crunch

When you need money urgently, the first thing you may think about is breaking your FD and withdrawing your finances prematurely. However, by doing this you incur a penalty and land up with reduced interest earnings. An effective way of avoiding this scenario is by availing of a loan against your FD.

By pledging your FD as collateral, you can obtain a loan of around 70% to 90% of its value from a lender. By taking this path, you avoid penalties and fees and also continue to earn interest through the FD tenor.

Now that you know why you should invest in a fixed deposit, consider the FD rates on offer.

FD interest rates of top issuers compared

Here are some of the FD interest rates obtainable from banks and NBFCs for FDs less than Rs.1 crore taken for a 36-month tenor.

Bajaj Finance:             8.75% – 9.10%

KTDFC:                         8.50% – 8.75%

LIC Housing:                8.25% – 8.50%

ICICI Home Finance:   8.25% – 8.50%

HDFC Bank:                 7.40% – 7.90%

Yes Bank:                     7.25% – 7.75%

SBI Bank:                     6.80% – 7.30%

When compared with the best banks and NBFCs in the country, Bajaj Finance comes out as a top financier as it offers returns at rates as high as 9.10%. While new customers can earn an FD interest rate of up to 8.75%, senior citizens profit from a 0.35% rate increase and existing customers get a 0.25% FD rate boost on FD renewal.

Having seen why you should invest in an FD and which financier to turn to for lucrative returns, delay no further in beginning your investment. In fact, with RBI repo rates just witnessing a cut in February 2019, you should look to start your investment before FD interest rates take a dip as well. The Bajaj Finance Fixed Deposit lets you do this simply and accessibly. You need just Rs.25,000 to get going and can begin your investment online as well!

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