A fixed deposit (FD) is a financial instrument provided by banks which provides investors a higher rate of interest than a regular savings account, until the given maturity date.
A conventional fixed deposit scheme is an excellent option to preserve a part of your savings.
Features of Fixed Deposits:
- Fixed deposits enable investors to earn higher interest on their surplus funds
- You can deposit money in a fixed deposit account only once, but to deposit more money, you need to create another account
- Though liquidity in fixed deposits is lesser, you can look for higher rates of interests, which are higher in case of company fixed deposits
- Fixed deposits can be easily renewed
- Tax is deducted at source, from interest on Fixed Deposits as applicable, as per the Income Tax Act, 1961.
Benefits of Fixed Deposits:
Fixed Deposit Interest Rate (long and short term) and interest rates on loans:
- They are the safest investment instruments, and offer greater stability
- Returns on fixed deposits are assured, and there is no risk of loss of principal
- You can opt for periodic interest payouts, to help you manage your monthly expenses
- There is no effect of market fluctuations on your fixed deposits, which ensures greater safety of your investment capital
- You can benefit from higher interest rates offered by company fixed deposits
- Some financiers also offer greater returns for senior citizens