Fixed Deposits are a popular investment instrument that banks offer. They provide multiple advantages to depositors and can be a good choice for people who want a secure way to grow their savings. Let us explore its key advantages.
What is an FD?
An FD is an investment option that lets you deposit a one-time lump sum amount. The money is locked away for a fixed tenure and earns interest at a fixed rate. This rate is decided by the bank while opening the account and remains fixed throughout the deposit tenure. When the FD matures, the bank credits the principal sum and interest earned to your Bank Account.
You can also receive the interest on an annual, quarterly, half-yearly, and half-yearly basis, depending on your preference.
Advantages of FDs
A Fixed Deposit Account offers the following advantages to depositors:
- Flexibility of tenure
Banks usually offer a range of tenure options for FD. This allows investors to understand their financial goals and pick a tenure that matches them. FD tenures generally range between seven days and 10 years.
- Ease of account opening
Today, you can easily open your FD online using a Banking app. The process is instantaneous, paperless, and lets you open an FD anywhere and anytime.
- Offers assured returns
One of the essential benefits of opening an FD is that it offers assured returns to investors. The interest rate on an FD is decided by your bank at the start of the FD and remains the same throughout its tenure. Hence, once you deposit the funds in your FD Account, you get the stated rate of return. To determine the maturity amount of your FD, you can easily utilise an online FD Calculator.
- Ensures liquidity
Most banks let you withdraw your FD prematurely. While you may need to pay a fee, it offers you the benefit of accessing your funds during financial emergencies.
- Manage monthly expenses
When opening your Fixed Deposit online, you can choose the option of periodic interest payouts. Once you select this, your interest gets paid out annually, quarterly, half-yearly, or half-yearly, depending on your chosen interest payout option. This allows you to enjoy a regular income. It also helps you tackle your monthly expenses.
- Apply for a Loan
When you opt for an FD, you can easily apply for a Loan against it. The Loan amount you receive may differ across banks. However, it offers you instant access to funds. You also need not disturb the FD. This makes an FD a dependable investment option.
- Offers diversification
By opening an FD online easily using Online Banking modes, you can add stability and complement a diverse investment portfolio.
Conclusion
As evident, an FD offers various benefits to investors. These benefits make FDs a popular choice among risk-averse investors who want a secure investment.
