Fixed Deposit Investment: Top 4 Reasons Why FD is High Return Investment Plan
September 13, 2019
If you are looking for investment plans that are secure and offer high returns, Fixed Deposits (FDs) can be a great option. Check out this post to know four reasons that make FDs one of the most popular investment options in India.
High returns are directly proportional to the investment risk. While there are now several investment options with high returns potential, they also require you to carry a higher level of risk which most investors are not comfortable with.
Fortunately, there are a few high return investment options that offer guaranteed returns with almost zero risks. FD is one such option. Let us have a look at four reasons that make FDs one of the best investment options for earning high returns:
1. Fixed Returns for Fixed Tenure
With FD investment, the returns in the form of interest rate and even the investment tenure are fixed even before you make the investment. You will know the exact amount that your investment amount will earn at the end of the tenure.
The FD returns do not depend on any kind of market conditions, which in itself is a big relief for investors as most other popular investments are market-driven.
2. Higher Rates for Seniors
Banks now offer preferential rates for senior FD investors. As compared to regular investors, senior investors can earn around 0.50% more on their FD investments.
Seniors often look for investment options that offer guaranteed returns. FD doesn't just fulfil secure returns criterion, but also provides better returns, making it a great choice in the later years of life.
3. Tax Savings
The Fixed Deposit return or interest that you earn from your FD investments are tax exempt up to Rs 10,000 in a financial year. However, if you are looking for higher savings in taxes, there are now tax-saving Fixed Deposits too.
These FDs have a lock-in period of 5 years, and the investments made in these funds are exempt from paying taxes up to Rs 1.5 lakh in a financial year under Section 80C. This allows you to earn higher post-tax returns from FD investments.
4. Premature Withdrawal
Many of the high returns investment options also have a fixed lock-in period, and you are not allowed to withdraw the funds before this lock-in period ends. With FDs, you get the premature withdrawal facility too. However, you will be required to pay a premature withdrawal fee.
Some of the banks also allow partial withdrawal with which your balance amount continues to earn interest until the end of the tenure.
The Many Benefits of Investing in Fixed Deposits
As you can see, several reasons make FDs one of the top high-returns options for investment in India. But how much can your FD investment earn in a year?
You can use an online Fixed Deposit Returns calculator to know the exact returns based on your FD amount, tenure and the interest rate offered by the bank.
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