If you are an investor who is planning to start putting your money into the right hands, you should start with Fixed Deposits without any double thoughts. This is because, firstly, it offers assured returns without any worries, and secondly, the fixed deposit interest rates in our country are quite lucrative.
Around a month back, I was planning to invest my extra income. This is when one of my friends told me that investing nowadays is as easy as ordering groceries from your smartphone. Just a few taps, and you are more than good to go, literally without going anywhere.
What is a fixed deposit?
In simple terms, it is a type of investment where a potential investor gives money to a financial institution/bank for a specific tenure, like a savings account. So, you agree to keep your hard-earned money with the bank for a specific amount of time, which could be a few months to a few years. During this time, your money literally sleeps in the bank, and you earn a handsome amount of interest on it.
(Tip: Always make sure to calculate fd interest before investing.)
The interesting part here is that the rate of interest is fixed when you start the deposit. It doesn’t change, which is why it’s called a fixed deposit. This basically means that you know exactly how much extra money you’ll make when the deposit matures.
What are the top 5 reasons to invest in fixed deposits?
So, the next time you have a question in your mind about “why to invest in fixed deposit”, you have all the points in front of you.
1. Less Risky
The key to long-term wealth creation is the right allocation of assets. Remember that different investment routes play different roles in your portfolio. Investing here offers you with added financial security and assurance of guaranteed returns; hence, this is considered a less risky investment option.
2. Tax saving
Another reason to invest in FD is to save your taxes. Section 80C of the Income Tax Act allows you to claim an income tax deduction for investing only in the tax saving Fixed Deposit plans. One can easily claim deductions of up to Rs 1.5 lakh per financial year by investing here.
(Note: These investments have a lock-in period of five years.)
3. Liquidity
While fixed deposits have a fixed term, they still tend to offer a certain degree of liquidity. Many institutions offer premature withdrawal of the fixed deposit but with a penalty. This is quite helpful in case of emergencies.
4. Guaranteed ROI
Before investing, it is human nature to use an FD calculator India which clearly shows that investing in FDs offers guaranteed returns. Before investing only, you know exactly how much you’ll reap from what you sow. Keep in mind that the rate of interest remains constant even during market fluctuations, which is considered one of the biggest fears of investors.
5. Risk Management and Diversification
Fixed Deposits can definitely be a part of a diversified investment portfolio. This is because they offer a stable and conservative element that balances out riskier investments. With this, the investor can easily manage overall risk and maintain stability in the portfolio.
Conclusion
If you plan to invest your hard-earned money and build your portfolio, start by taking little steps. Fixed deposit is one of the safest and most secure investment options in the current era, so go for it!
