Most investments are tailored according to our wants, needs, and financial goals. Each of us has our own preferences while investing. However, there are some financial instruments that you must have in your investment portfolio. Fixed deposit in India is one such instrument. While a lot is often said about this traditional investment, the fact remains that a fixed deposit is still one of the smartest ways to accumulate wealth over a period of time.
Whether you have already invested in a fixed deposit in India or are still contemplating whether to have one, here are five reasons that will help you decide.
Risk-free returns
A fixed deposit, undeniably, is the safest investment plan, particularly when you compare it with market-linked instruments liked stocks and mutual funds. Since there is no effect of market volatility, the money that you park in a fixed deposit is a great way to keep your capital safe. If you are investing for the first time, then a fixed deposit is the best way to start since you can arbitrage the risks of other market-linked investments in your portfolio and get an assured returns upon maturity.
Secured investment
Besides having a near-zero risk, fixed deposits are the safest investment bet. The safety of a financial instrument is based on ratings given by companies like the Credit Rating Information Services of India Limited (CRSIL). The FAAA rating and MAAA rating are the highest ratings given to financial instruments which indicate that payment of interest and return of the principal are timely. A fixed deposit in India such as Bajaj Finance FD, which has a FAAA/stable rating from CRISIL and MAAA/Stable rating from ICRA will offer assured returns, and can be a safe investment plan to grow your funds.
High Return on Investment
Fixed income is one of the biggest reasons why people invest in fixed deposits. While rates fluctuate according to market conditions, an investor will get the interest promised by the company all through the tenure, at the time of making the investment. For instance, Bajaj Finance FD offers the highest fixed deposit interest rate in India up to 7.35 percent. It’s a brilliant way to ensure robust returns over a fixed period of time.
If you are wondering how to calculate FD interest rate on your investment, you can use a reliable online FD calculator to know your returns before making an investment.
The power of compounding
One of the biggest features of a fixed deposit in India is the power of compounding. A small amount can be turned into a bigger volume with compounding. That aside, the compounded interest can be reinvested along with the principal for a duration ranging from six months to 10 years in a fixed deposit. Bajaj Finance FD offers up to five years of cumulative investment in fixed deposits. The investment can be made via both online and offline modes. Cumulative fixed deposits are ideal for those who don’t need a regular interest payment.
Added benefits
A fixed deposit in India usually comes with a number of added benefits. Some fixed deposits come with loan facilities which offer an easy access to funds in case of an emergency. You can keep the fixed deposit as a collateral and avail loans of up to 75 percent of the FD value. You can also go for premature withdrawal of funds from your FD account by paying a nominal interest rate penalty. The best part of a fixed deposit is that it keeps you insulated from uncertainties that often grip the financial market.
Author Bio:
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory.