Features of Fixed Deposits In India

 


A fixed deposit is an investment strategy where you can place a one-time big sum and get interest.

The fixed deposit's interest rate is determined by the principal invested and the length of the investment. You will therefore receive the principal sum as well as compound interest at maturity. This is only accurate, though, if you choose a cumulative Fixed Deposit. Additionally, you have the choice of non-cumulative FDs, which pay interest on a monthly or quarterly basis.

Fixed deposits are often preferred by investors because they are simple and safe. After depositing your lump cash, you continue to earn a fixed interest rate. Changes in interest rates or market swings have no impact on the returns on fixed deposits. There is no obvious risk of losing your principal, and you are guaranteed returns on your deposit. You have the option of receiving the interest either on a regular basis or at maturity. However, unless you don't mind incurring a penalty for early withdrawal, you are not allowed to take money out of your deposit before it matures.

Features of Fixed Deposits

Secure Investment

Most market-driven investments are dynamic over time. Fixed Deposits, on the other hand, are more dependable and safer. This is due to the fact that FD returns are fixed. They are unaffected by market turbulence and are constant, at least during the investment period.

Rate of Interest

The rate of interest offered depends upon your principal amount and chosen duration. Short-term FDs often have lower interest rates than long-term FDs.

Renewal and Flexible Tenure

The duration of an FD can range from one week to ten years. When opening the FD, you can select the term most suited to your needs. When the FD matures, you can renew it just as easily, but be sure to check the interest rates because they might change.

Tax Deduction

According to the Income Tax Act of 1961, the interest generated on the principal amount is subject to statutory tax deduction. When filing your income-tax returns, you can include FD interest income under the "other income sources" heading.

Conclusion

If you want assured earnings and don't want to risk your money, a fixed deposit is a great investment choice. Additionally, if you require a loan from your bank, you can use your FD as security. Apply for a fixed deposit now that you understand what it is and how it operates.

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