Investors who want to park their savings in risk-free instruments that provide good returns can think of investing in a fixed deposit. The features like periodic interest payouts and flexible tenor make it a popular investment scheme among the several investment options that are available in the market.
However, to reap extra benefits and high returns from an FD, one must be careful while investing. Here are some ways to invest smartly in an FD:
Explore corporate FDs with high interest earnings
Fixed deposits are not offered only by banks but even finance firms and post offices provide many FD plans. Therefore, you must evaluate these FD plans as well before making a final decision.
Bank FD rates offer interest rates in the range of 2.5 to 5.5 as of now whereas company FDs like Bajaj Finance FD help to grow your deposits at 6.85%. This interest rate is high enough to create a substantial difference in returns at maturity. Also, the option of auto-renewal of FD enables you to invest the interest earnings and multiply it further.
Invest in the name of your relative
If you are already bearing the burden of taxes then it would be better if you invest some money in the name of your close relatives like a spouse, father/mother, or anyone whose income doesn’t fall under taxable brackets.
By doing so, you will be able to save some tax. Some banks and finance companies offer a higher interest rate to senior citizens. Therefore, you can open an FD account in the name of an elderly member of your house.
For example, Bajaj Finance gives a 0.25% additional FD rate to citizens who are above 60 and you can use this opportunity to earn higher returns. Moreover, you can start investing by depositing just Rs. 25000.
Instead of parking all your savings in one FD, you can invest in multiple FD schemes. This is called staggering deposits and it allows you to leverage the benefits of several FD plans at once.
For example, you can invest a part of your savings in a cumulative FD for compounding returns and the other part can be invested in a non-cumulative FD to earn periodic returns.
Similarly, you can select different tenors for each FD to balance interest rate fluctuations and to get more liquidity options. This will reduce the risk of losing interest due to premature withdrawal as well.
Multi-deposit facility from Bajaj Finance FD enables you to stagger your deposits conveniently as it allows you to deposit in different FD plans for varying tenors from 12 to 60 months. Also, you can opt for a loan against FD to avoid penalties that would apply to early withdrawals.
Systematic Deposit Plan
If you are not keen on investing a lump sum amount at once, you opt for the Systematic Deposit Plan (SDP) from Bajaj Finance that enables you to invest Rs. 5000 or more every month. The deposits can be made from 6 to 48 number of times as per your financial obligations and needs.
Each deposit is considered as an individual FD and it grows at a rate applicable on the date of deposit. A single maturity date can be set for all the deposits or you can lock-in each deposit for up to 60 months. This plan enables you to enjoy the perks of FD by utilizing an investment process that is somewhat similar to an RD.
If you are not sure where to invest then think of fixed deposits as they enable you to reap high returns without subjecting your deposited amount to any risk. However, you must be smart enough to pick the right tenor and FD plan to maximize your returns. Instead of bank FDs, you can go for corporate FDs like Bajaj Finance that are providing a higher interest rate and modern features like online account opening procedure, FD calculator, multi-deposit facility to ladder your deposits, etc. Also, you get a 0.10% additional interest rate on opening an FD account online. You can even invest in the name of an elderly member as Bajaj Finance is offering a 0.25% extra FD rate to senior citizens.
By Gaurav Khanna
who is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends.
Featured Image Caption:- Fixed Deposit Investment
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