Share market investments are definitely one of the most beneficial options for long term investments. But there are people in India who aren't aware of how share market investments work. Either that, or they're not ready to work with the stock market and its unpredictability. In this case, a fix deposit is the safest and the most reliable investment option for such people.

Understanding Fixed Deposit

A fixed deposit is an investment plan where you lock in your money with a bank for a specified period of time. Over this period, your money will gain interest, using the rate of interest that was provided.

In India, fixed deposits are regarded as safe and risk-free options. You may approach any firm you want for a fixed deposit. The tenure you can choose ranges from 7 days to 10 years.

Benefits Offered by Fixed Deposit

There are many reasons why fixed deposits are becoming popular in our country. If you aren't aware of the advantages of investing in a fixed deposit, here are some:

Safe and Reliable Returns

This is the best advantage of the fixed deposit. When you invest in a fixed deposit, you won't be affected by fluctuations of economic conditions. The same cannot be said for other investment avenues like stocks and shares. You can calculate FD interest and you will get the specified maturity amount at the end of the term. You can choose the frequency of interest payment as well. This means that you can receive interest amount quarterly, half-yearly, annually. You can even choose to forego that and gain the lump interest at the end of the term.

Flexible Duration

The span during which you will keep the money is quite flexible. For instance, if you invest the money in Bajaj Finserv, you can choose a tenure ranging from 1 year to 5 years. You will have to determine your financial goals and invest your money based on that. You can also take advantage of the tax saving term deposit. This offers certain concessions on income taxes.

Easy Withdrawals

When you get a fix deposit, you can withdraw the whole money and opt for premature closure. There may be a penalty for this. But you can recover the total amount you've invested as well as a part of the interest for the time during which the money has been kept. This saves a lot of people when there is some emergency. You can also use the FD interest rate calculator in days to find out how much you have received and what amount would be deducted as penalty.

Saving Habit

There are some financial institutions that allow you to save even a few thousands of rupees in fixed deposits by which you can earn interest. This helps in inculcating the habit of saving. When you are able to invest a small amount of money, you won't use it for unnecessary expenses. The best part is that you can get higher interest rates on Fixed Deposit in place of keeping the money in the savings account. Fixed deposits are flexible in terms of interest payouts, tenure and withdrawal. Thus it is applicable for both long and short term financial goals.

Overdraft and Loans

Now you can apply for loans in banks for the amount that you have kept as fixed term deposit. You will be given a certain percentage of the fixed amount as loan.

These reasons would compel you to consider investing in a fixed deposit. But compare the interest rate on FD before you choose the financial institution.