While making Fixed Deposit, you can choose the tenor ranging from 15 days to 10 years as per your convenience.
FD as Investment Option: Fixed deposits of banks can be a better option for deposits and savings. The biggest reason for this is that investing in them is more secure and the returns are also predetermined. Apart from this, FDs are not market linked schemes, so market fluctuations do not affect them.
There is also an option to choose different tenures while making a fixed deposit in the bank, so you can make a fixed deposit for a period ranging from 15 days to 10 years, as per your convenience. But before keeping your money in bank FD, it is important to keep some things in mind. Let us know what are those important things.
FD laddering technology is a better option
FD laddering is a better option among fixed deposits. In this, instead of investing the entire amount in one go, it is invested little by little in different tenures. Suppose you have 5 lakh rupees. Instead of investing it in one go, you can invest in 5 FDs for different tenures. The maturity period of these five FDs will also be different. Investing in this way will result in sufficient liquidity. Apart from this, you can also remove it and fix it again. For example, after the maturity of the first FD, the second FD will mature after two years. This can then be fixed for the next five years.
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Low returns on FD
Before investing money in FD, you should also keep in mind that if you fall in the 30 percent slab of income tax, then a large part of the interest earned on FD will be deducted in tax. Explain that the interest earned on bank FD has to be taxed as per the income tax slab. Most of the banks are giving interest on FD at the rate of 6.5 percent. In such a situation, FD is a way to keep your money safe and not a way to get better returns.
special deposit
Sometimes banks launch special FD schemes for 444 days or 650 days or 888 days. Those investing in these schemes are given more interest by the banks. You can generate high returns by investing in these schemes.
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Sweep-in FD
FDs come with a lock-in period and you have to prematurely break the deposit amount for cash when needed. Instead, you can also invest in sweep-in FDs of banks, which maintain liquidity and at the same time you get interest equal to FD.
Small finance banks offer higher interest
Small finance banks offer higher interest rates on FDs than major banks. Even in small finance banks, you get insurance of up to Rs 5 lakh on your deposits. Therefore, after examining the performance of the bank, you can take advantage of better interest by investing in them.
(Article: Sunil Dhawan)
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