What are the Advantages of Having a Fixed Deposit?

A fixed deposit is the most trusted way of investing money for securing long-term goals. Each FD holder makes a one-time deposit selects tenure, from as low as 7 days, to as long as 20 years. Fixed deposits are a great way to earn rewards over a while, without incurring any losses. Also, anyone below the age of 60 years can open an FD. The early you start, the better it is! But if you’re a senior citizen, you needn’t be stressed, because having an FD above the age of sixty can help you attract more interest rates.

Also, a fixed deposit account is the most favourable investment option amongst low-risk takers and senior citizens who want to earn stable returns, without having to worry much about the volatile share markets. Especially, in a country like India, it is safe to say that fixed deposit is almost everyone’s favourite and has been considered the safest option because of its stable nature and the high number of conservative investors.

Advantages of having a fixed deposit

So, here we are with a bunch of advantages of having a fixed deposit.

Helps during financial crunch

Given the difficult times that we live in, having a fixed deposit can come with a world of advantages. In emergency cases, the depositor may either choose to withdraw the deposited amount with a minimal penalty or choose to take an urgent loan against the FD. Most of the banks facilitate a loan of up to 90% against the deposit in case of urgency.

One-time investment

If you are new to the world of investment or have little to no time to track on reading the market graphs, then fixed deposits can make your life a lot easier. Having an FD account requires no understanding of how the market works and can thus be an easy investment option for a first-timer.

Secured returns

The security of an FD is unquestionable. As time and again, fixed deposits have proven to fetch the investors stable and secured returns. And regardless of the inflation, the depositor is liable to get assured returns on reaching maturity in addition to the principal amount.

Loan against fixed deposit

As an FD account holder, the depositor can use their deposits as collateral for fetching the desired loan amount. Most of the banks offer the depositor a loan ranging somewhere from 60% to 90% against the deposited amount. Thus, having a fixed deposit is truly beneficial.

Can be personalised

Fixed deposits are customisable. And allows an early investor to start with as low as Rs 5,000 without any hidden charges or upper limit. The depositor is free to personalise an FD and put more into the account without any hassle. Also, the depositor is free to choose the tenure (short term, mid-term or long term) of the fixed deposit. This way it becomes very easy to manage an FD.

Controls the risk factor

There’s no denying the fact that fixed deposits are one of the most reliable kinds of investments and have helped many in securing a safe future. FDs involve no risk of losing the money unlike some other investment options like Mutual funds, cryptocurrencies, gold ETFs, etc. Also, having a fixed deposit account ensures securing funds for long-term financial goals.

Insured Savings

According to Credit Guarantee Corporation, a subsidiary of Reserve Bank of India, every FD account holder is ensured of an amount up to Rs. 5,00,000. This also means that regardless of a bank’s financial future, the amount invested by a depositor on an FD is hundred per cent safe. And FDs guarantee to fetch decent returns over time.

Savings upon Taxes

According to 80C of the income tax act, 1961, every depositor can benefit from tax relaxation of up to an amount of Rs 1, 50,000 as a deduction if claimed.

Helps create a credit history

If you are an individual with no credit history, having a fixed deposit can help you achieve one. As a first-timer, you would not be on any creditors list, so to get away with that you can use your fixed deposit. Yes, you heard it right! You can get a credit card against your fixed deposit. But make sure to use it wisely and make your payments regularly without any delay, if any.

FDs comes with health insurance

What could be much better than having your future goals and health secured In the same investment? Many banks now offer health insurance benefits to their customers. And given the trying times that we live in, opening an FD which comes with health benefits is a bonus.

So, why waste any more time scrolling through the screen? Now that you are aware of the advantages of having a fixed deposit, chalk out the financial goals and turn your dreams into a reality without having to worry about the uncertainties.