Fixed deposits are not a new tool, however, they have proved to be a smart choice especially in today’s volatile market.
Today, there is no dearth of asset classes to invest in, however, the greater challenge is to choose the right investment avenue. Fixed deposits are not a new tool, however, they have proved to be a smart choice especially in today’s volatile market. The advantages of fixed deposits are that it can be opened at a very small amount, or at a young age which offer steady returns with safety.
So what are the key benefits of a fixed deposit investment?
One, fixed deposit investment inculcates a habit to save from a young age. It provides the security of assured stable returns and does not fluctuate like any other asset class.
Two, owing to the current scenario, a safe option to invest your money without face-to-face interaction can act as a blessing. Fixed deposits nowadays can be made anytime, from anywhere. One can book/open an FD online via internet banking or mobile banking.
Three, fixed deposits are traditional and the most trusted way of savings. Today, banks also offer value-added offerings in their fixed deposits such as free life insurance cover. There are benefits for senior citizens too in FDs where they can earn 0. 5 percent per annum extra interest which is subjected to terms and conditions.
Whilst there is uncertainty around us, in terms of health and wealth, there are banks that are attracting customers through viable options like an FD with healthcare benefits.
Four is the benefit to invest in a tax-saving FD that helps the customer save under section 80c of the income tax act. Banks also provide an overdraft facility against the FD. This helps in keeping your FD intact yet raise funds for an emergency or business use.
Five, with an FD investment, the customer has the flexibility to plough back the interest earned at fixed time intervals or at the time of maturity. Also, they can leverage the power of compounding with a reinvestment option, wherein the customer can earn interest over accrued interest.
So go ahead, take the traditional route of saving and witness the power of compounding your wealth.
The author, Praveen Kutty, is Head, Retail SME Banking at DCB Bank
First Published: IST