Fixed Deposit Investing: 10 Important Things You Should Know Before Investing in FD
September 18, 2019
While Fixed Deposits (FDs) are one of the easiest investments, there are still many things that one should know before opening an FD account. Check out this post to identify 10 of the most important things you should know before investing in FD.
No matter what type of investments you select, it is essential to know as much about them as possible to make sure that your capital remains protected and you earn the expected returns. While FDs are not as complex as other investment options, there are still several things that an investor should know before opening an FD account. Ten such essential things to know before investing in FD are as follows:
1. Interest Rate
As banks fix their own interest rates on Fixed Deposits, it is essential to compare the rates offered by different banks before opening an FD account. Only trust a reputed bank that offers a competitive rate for your investment.
2. Interest Rate for Seniors
Seniors are offered a slightly higher Fixed Deposit interest rates as compared to regular investors. If you are a senior citizen or looking to open an FD for your senior parents or family members, make sure that you do check what rate the bank offers on FD for senior citizens.
3. FD Tenure
To suit the needs of different investors, banks now offer FDs for 7 days to 10 years. Select the tenure carefully as you will be required to remain invested in the account for the selected duration. Even the interest rate varies based on the FD tenure.
4. Minimum Account Balance
You should also check the minimum amount that you need for opening an FD account. Most of the top banks allow you to open FD for as little as Rs 10,000. If you are opening an FD account for a minor, the minimum balance is generally Rs 2,000. You can also use a Fixed Deposit calculator to know how much your FD amount can earn at the end of the tenure.
5. Maturity Date
You can also find the FD maturity date on the receipt that you receive for opening an FD account. If you are opening an FD account for a particular purpose, like gifting it to your child on his/her birthday, double check the maturity date to make sure that the FD matures at the right time.
6. Premature Withdrawal Penalty
Fixed Deposit investment comes with early withdrawal facility with the help of which you can make a partial or complete withdrawal from your FD account even before the maturity date. However, you are required to pay the penalty for the same. Do check this penalty as well before opening the account.
7. Auto Renewal
Many banks now also offer FD auto renewal facility. With the help of this facility, your principal amount, as well as the accrued interest, is re-invested for a duration of your choice. If you have opted for this facility, the same will be mentioned on account opening receipt.
8. Interest Payout
You can also select the interest payout frequency of your choice with FD investments. Most banks offer monthly, quarterly, half-yearly, annual and full tenure interest payout options. If you are looking for FD investment tips, select the interest payout frequency carefully to meet your investment objective.
9. Nomination Facility
When you open an FD account, you will also be required to choose a nominee. In the event of your unexpected demise during the FD tenure, your nominee will receive the FD amount. The details of the selected nominee are also mentioned on the account opening receipt.
10. TDS Declaration
The bank will deduct Tax Deducted at Source (TDS) if your FD interest income is more than Rs 10,000 in a year. However, if you fall under the no income tax bracket, you will have to submit Form 15H or 15G as a declaration for the same. Make sure that your declaration is updated in the bank records, so that no TDS is deducted from your FD interest.
Invest in FDs with Complete Confidence and Convenience
Fixed Deposits are one of the safest investment options in India. Just keep the above FD investment tips in mind before opening an FD account and select a reputed bank to experience utmost convenience and safety.
The contents of this document are meant merely for information purposes. The information contained herein is subject to updation, completion, revision, verification and amendment and the same may change materially. The information provided herein is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person‘s nationality, residence or otherwise) be contrary to law or regulation or would subject lClCl Bank or its affiliates to any licensing or registration requirements. This document is not an offer, invitation or solicitation of any kind to buy or sell any security and is not intended to create any rights or obligations. Nothing in this document is intended to constitute legal, tax, securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any product or service. Please obtain professional legal, tax and other investment advice before making any investment. Any investment decisions that may be made by you shall be at your sole discretion, independent analysis and at your own evaluation of the risks involved. The use of any information set out in this document is entirely at the recipient's own risk. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith by lClCl Bank and from sources deemed reliable. There can be no assurance that such projections will prove to be accurate. lClCl Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith and sources considered reliable by lClCl Bank. In preparing this document we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. 'lClCl ' and the 'I-man' logo are the trademarks and property of lCICl Bank. Misuse of any intellectual property, or any other content displayed herein is strictly prohibited.