Planning To Invest In Fixed Deposits? Here Is What You Need To Know

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Written By Berry Mathew

When it comes to investment, the most popular one is a fixed deposit. This is because it is a low-risk investment which offers assured returns on the investor’s savings and is a good option for people who want to save for a specific goal, such as a down payment on a house or children’s education. 

In our country, fixed deposits are considered one of the safes investment instruments as they are typically backed by the government or the bank itself. Moreover, potential investors are more inclined to invest in it due to assured returns as the Fixed Deposit Interest Rate is stable through the tenure. 

What is a fixed deposit?

It is a type of bank account only where you deposit a lump sum amount of money for a fixed duration. Now, this duration is generally from a few months to several years and in return, the bank pays you a fixed rate of interest on your total deposit. 

Further, the rate of interest offered on FDs is generally higher than what you would get on a regular savings account. So the longer the duration of the fd, the higher the interest rate offered. Once the money is deposited here, you cannot withdraw it until the fixed period is over without paying a penalty fee. 

(Tip: Use a FD calculator before investing to calculate fd interest for a wise investment.) 

Why Should You Invest in Fixed Deposit?

  • Assured returns

FDs offer a fixed interest rate that is agreed upon at the investment time. This basically means that the investor is guaranteed to receive a fixed return on their investment, regardless of what happens in the market. 

  • Low Risk

FDs are considered to be a low-risk investment option as the risk of losing money in this scheme is relatively less. This is because the invested amount is protected from market fluctuations, and the returns are not affected by changes in interest rates. 

  • Flexible

FDs offer flexible tenures ranging from a few months to several years. As a result, investors can choose the tenure that suits their investment needs as well as financial goals.

  • Tax Benefits

FDs offer tax benefits under Section 80C of the Income Tax Act. The interest amount earned on FDs is taxable. However, the investors can claim a deduction of up to Rs 1.5 lakh on the principal amount invested in a financial year. 

How to invest in a fixed deposit?

Nowadays, investing in fixed deposits is as easy as ordering groceries or food from your smartphone. You need just the right app. Around two months ago, when I was planning to invest in the same, one of my colleagues told me about the Bajaj Finserv application. Believe me, it is super easy to use. 

  1. Download the app from Play Store/App Store
  2. Sign up by entering your mobile number
  3. On the home page, you’ll see the Investment Bazaar section
  4. Tap on Fixed Deposit
  5. Proceed further as per your suitability/requirements

(Tip: Use an fd calculator online before investing.)