Given the economically uncertain times that we live in, it is absolutely essential to be financially prepared for a secure future. Part of this involves looking for prudent saving and investment options with risk-free returns like fixed deposits.
Fixed deposits have been a preferred financial tool since ages for their attractive returns, flexibility, and security. What’s more, you can profit from FDs over an extended period as the FD interest is compound interest, helping you maximise your returns. Safe to say, investing in FDs will ensure you have a safety net for when times get tough.
Still not convinced? Let’s discuss the various advantages of investing in FDs.
Assurance of Returns
Compared to today’s volatile market, a fixed deposit gives fixed returns. While investors are actively shifting to other investment options like equity, mutual funds, debt funds, and more, they don’t necessarily protect you against market uncertainty. In contrast, fixed deposits will offer guaranteed FD interest which is decided when taking the FD.
Flexibility
Fixed deposits come with some flexibility, which other types of investments do not offer. For example, the depositor can change the maturity date or withdraw money before the maturity date with minor charges.
Reduced Portfolio Risk
All asset in your investment portfolio—gold, stocks, fixed deposits, and equity—plays a unique function. Therefore, with its vast returns, a fixed deposit offers much-needed stability to your portfolio. Rest assured, you won’t have to worry about losing your capital once you invest in an FD.
Low Deposit Requirement
Unlike many other financial products, starting a fixed deposit does not require accumulating a vast amount. Most banks allow you to book a fixed deposit account with a deposit amount of as low as Rs. 10,000. This makes it an attractive investment option for different classes of investors looking to save to achieve their financial goals.
Tax Benefits
With tax-saving fixed deposits, you also have the option to claim maximum tax benefits of Rs 1.5 lakh under Section 80C of the ITA.
So long as your taxable income is less than or equivalent to Rs. 1.5 lakh, you may subtract the amount invested in your tax-saving FD from it when you file your ITR. You may claim this deduction only for the financial year the FD is created. However, tax-saving FDs come with a minimum lock-in period of 5 years.
Depending on your tax bracket, you will save money on taxes. For instance, you can save up to Rs. 45,000 in taxes if you deposit Rs. 1.5 lakh in a tax-saving FD and are in the highest tax bracket (30%). Additionally, your bank will take TDS under your tax obligations from your interest income.
Joint Holding and Nomination facility
Fixed deposits are usually held in one person’s name, but it is possible to open a joint account with another person. It is done by nominating the other person to be a joint holder on the account. The selected person will have all the rights and privileges associated with being a joint holder, including access to funds and withdrawal rights during emergencies.
Wrap Up
FD is a good route for those who do not want to take a risk. Because FD requires less investment, the risk is less than other investments, and the lock-in period is also less than PPF accounts.
Therefore, start immediately by opening an FD online with IndusInd Bank to begin saving. You can create an online FD with us even if you don’t have a current bank account.
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