Fixed deposits are an ideal option for individuals seeking a low-risk investment avenue. They guarantee a stable interest rate on the principal amount for the entire duration of the deposit, facilitating gradual growth over time. And this may be an ideal time to invest in fixed deposits as many banks usually come out with special FD schemes or rates during the festive season.
A significant benefit of FDs is their adaptable tenure, which enables investors to manage several deposits with different timeframes. You may choose to establish an FD account with your existing bank or opt for another institution that offers more competitive interest rates. The decision rests entirely with you; however, it is important to note that the procedures may vary, especially concerning KYC and documentation requirements if you select a bank with which you have no previous association.
Fixed deposits provide assurance for your principal investment while generating a reliable income stream. If you have a lump sum that you do not plan to access in the near future, depositing it in an FD account could be a wise choice. The returns on FDs are stable and unaffected by market volatility, ensuring a consistent interest rate for the agreed duration.
Also Read: Home Loan Festive Offers: Key things to keep in mind before taking a loan
Setting up a fixed deposit account has become a straightforward process. You can either opt for online banking services or visit the nearest branch of any bank. If you decide to open an FD account with the same bank where you hold a savings account, you can avoid the KYC process and easily transfer funds.
Moreover, banks offer senior citizens an additional 50 basis points on fixed deposit interest rates. Therefore, if your household includes senior citizens, it may be beneficial to open fixed deposits in their names to take advantage of the higher interest rates.
Fixed deposits can also act as a dependable resource for urgent financial needs or emergencies, as the funds can be accessed promptly. Additionally, it is possible to obtain a loan against your FD; however, it is recommended to carefully examine the terms and conditions before proceeding.
It is crucial to understand that withdrawing your fixed deposit before the maturity date will result in a lower interest rate and a penalty on the fixed deposit amount.
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