How does a Fixed Deposit Investment protect you and your savings?

  • Deposit
  • 1 Months ago

Written by - Shriram

A fixed deposit has a predetermined interest rate unaffected by market changes, which can help protect your invested money. You can choose a cumulative fixed deposit scheme to earn more interest on your investment. Tax advantages are available on a fixed deposit that reduces taxes. An FD (Fixed Deposit) allows you to borrow money against it, still earning interest on the invested amount.

It is always wise to invest your surplus money rather than leaving it idle or spending. There are several investment options available in the market, but a fixed deposit is one of the best options you can choose because it offers assured returns at low risk. An additional benefit to consider while investing in an FD is that it offers higher returns than other market investments.

A Shriram FD offers interest rates up to 8.75% per annum, including an additional 0.50% interest for senior citizens. Apart from assured returns, you can also avail of the flexible tenure, allowing you to achieve your financial goals at your convenience.

Being a simple investment scheme to understand, many people prefer to entrust their savings to an FD. To understand how a fixed deposit can protect you and your money, let's explore the benefits and features of an FD.

Non-Financial Benefits of a Fixed Deposit

•    Apply for a Loan:

In case of emergencies or financial needs, you can offer your fixed deposit as collateral and get a loan. With this feature, you can also keep earning interest while you use it to get a loan.

•    Easy Liquidity:

A fixed deposit can be quickly closed, making it an excellent option as an emergency fund. However, there will be a penalty for the premature closing of the deposit account. The penalty amount varies for every bank or NBFC (Non-Banking Financial Company). This way, you can have an emergency fund according to your needs.

•    Improve Risk-Appetite:

Since a fixed deposit is secure, it gives you the freedom to try investing some money in market-related schemes. The market-related investment schemes have a high-interest payout but may also suffer due to market fluctuations.

•    Better Investment Habit:

Setting aside a lump sum of your surplus money for a period at a predetermined interest rate is a great way to start developing a healthy saving habit. The penalty for a premature withdrawal from a fixed deposit also makes a person think twice before breaking the deposit.

Financial Benefits of a Fixed Deposit

•   Simple Investment Tool:

Unlike some other investments, the procedure to invest in a fixed deposit is very easy. You must select a tenure and set aside some of your surplus money to earn a fixed interest rate. It's a one-time effort and can be auto renewed or auto-withdrawn at the time of maturity. With a Shriram FD, you can also get an additional 0.25% interest per annum for all matured renewals of deposits.

•   Tax Benefits:

A tax-saving FD can help you save on taxes. It is a 5-year deposit during which you will not be allowed to withdraw funds. You can claim upto Rs. 1.5 lakh per annum in your taxes.

•   Special Senior Citizen Schemes:

Senior citizens enjoy higher interest rates on a fixed deposit with most financial institutions. Senior citizens get up to 0.50% extra interest rate if they are over 60 years of age. Any deposit they invest in can get them a decent interest payout to achieve their financial goals.

•   Assured Returns:

A fixed deposit investment is very secure and can guarantee the return of your money along with interest earned on it. The interest on a fixed deposit is usually higher than what you can get from a regular savings account.

•   Expand Your Investment Portfolio:

An investment portfolio includes and showcases different investment schemes in which you have invested. With a fixed deposit, you can diversify your investment portfolio. A fixed deposit is secure, and the interest rates are usually excellent, making it easier for individuals to start investing.

How to Maximise Returns with a Fixed Deposit?

•    Try your best to select the cumulative option of a fixed deposit as you earn compounded interest.

•    FD laddering is a great way to invest a large lump sum of money. You will have to divide them into parts to invest for different periods to earn more interest and have deposits maturing when needed.

•    Avoid breaking an FD or removing funds from your account, as this directly impacts the amount of interest you will get upon the account's maturity.

•    If your deposit matures and you don't need the money immediately, you can always renew the FD to earn more interest on it.


Also Read: How to Open a Fixed Deposit Account Online with Shriram

Conclusion

An FD can be used to secure your money and ensure you have access to emergency funds and loans when you need them. The flexible tenure of an FD also allows you to plan your financial goal most efficiently. While saving money is essential, having the opportunity to watch it grow is just as unique.

Invest in a Shriram Fixed Deposit to protect your money and watch it grow to fulfil your financial goals. You can use the Shriram FD calculator to determine the interest rate you can get for a deposit of your choice.

FAQs

1.    What is the safest way to invest my money?

The safest way to your money is by opening a fixed deposit account. An FD offers assured returns and is not impacted by market fluctuations. A Shriram FD is secure and offers higher interest rates up to 8.75% per annum, which includes an extra 0.50% interest for senior citizens.

2.    Is a fixed deposit the safest investment?

Yes, a fixed deposit is one of the safest investments as it has a predetermined interest rate that will not change till the maturity of the deposit.

3.    What is the safest investment with the highest return?

A fixed deposit is one of the safest investment options and offers higher returns than a regular savings account.

Key Highlights:

•    A fixed deposit can keep your money safe because it uses a predetermined interest rate that is not impacted by market fluctuations.
•    You can keep your money in a cumulative deposit to get more interest on your investment.
•    Tax benefits are available on a tax-saver fixed deposit.
•    You can take a loan against an FD and continue to earn interest on the deposit.