With proper financial planning, you can use a Fixed Deposit (FD) to achieve both short-term and long-term goals. A fixed deposit is one of the best investment options because it assures guaranteed returns. An FD also offers higher interest rates than a regular savings account. These features and benefits make the fixed deposit an attractive investment option to all sorts of investors.
A fixed deposit is a practical investment that allows you to save your hard-earned money and secure guaranteed returns. To invest in an FD, you must have a lump sum of money to set aside for a fixed tenure to get better returns. Once the tenure of the fixed deposit is complete, you will earn interest on the maturity amount. You can open a fixed deposit at any bank or Non-Banking Financial Company (NBFC) of your choice, you can maximise your savings quickly and securely. A fixed deposit can be opened via a simple online process on Shriram website. Shriram FD calculator will help you determine the amount of interest you get on a fixed deposit.Many financial institutions offer different fixed deposit plans. Cumulative and non-cumulative fixed deposits are the most popular type of plans in a fixed deposit. It may become increasingly difficult to understand how to select the best one. Let's explore the top 6 ways to pick the right fixed deposit:
1. Rate of Interest
The interest rate on an FD is decided according to the tenure you select. A person over the age of 60 years is eligible to get extra interest on their fixed deposit as they qualify as a senior citizen. The interest rate on an FD also depends on the financial institution you choose. Investing in a corporate fixed deposit can get you higher interest rates than a bank. Ensure that the financial institution you choose offers more than 5% interest on an FD. Shriram offers an 9.40%* p.a. interest rate on a fixed deposit, including the additional 0.50%* p.a. interest rate for senior citizens and 0.10%* p.a. for Women Depositors.
2. Tenure
Selecting a tenure for your FD is important as it is directly related to the interest you can earn. A fixed deposit has a flexible term that allows you to plan your financial goals efficiently. Short-term and long-term goals can be achieved by selecting an appropriate tenure for your deposit.
Depending on the financial institution, an FD tenure can range between 7 days and 10 years. A 5-year FD, also known as a tax-saving deposit, can help you claim up to Rs. 1.5 lakhs as an exemption in a year. Use the Shriram FD calculator to determine the amount of interest you can get for a specific tenure.
3. Withdrawal Rules
It is most advisable to know all about the rules and regulations of FD withdrawal. This information can be useful in cases of emergencies when you need to withdraw or break your fixed deposit. Most financial institutions charge a penalty for premature withdrawal of a fixed deposit. Some banks and NBFCs may waive the penalty if the depositor can prove the premature withdrawal was made for an emergency. Typically, the penalty charges range from 0.5% to 1% of the accumulated interest in the FD.
4. Credibility of the Institution
Traditionally, banks are known to be safer for a fixed deposit. At the same time, corporate companies offer higher interest rates and have a rating system that allows you to determine the safest option. A corporate FD is rated by credit agencies like CRISIL and ICRA based on various criteria. These ratings give you more insight into which institution can offer the safest deposit. It is always essential to do a background check before opening an FD in a bank or NBFC.
5. Choose Between a Cumulative and a Non-Cumulative FD
A fixed deposit is divided into two main categories based on the payout frequency. A cumulative deposit can help you earn a higher interest rate, but you will receive the payout upon maturity of the FD. A non-cumulative deposit allows the investor to get a regular interest payout. The payout frequency can be received either monthly, quarterly, half-yearly or yearly.
A cumulative deposit is most advisable for the investor who is saving for a specific financial goal or long-term investment and wants to grow their finances. A non-cumulative deposit is for investors for more minor financial expenses, as the regular interest payout will suffice the financial requirements and earn benefits on the principal amount.
6. Loan Against FD
The loan on the FD facility is significant as it can help in emergencies when one needs money at short notice. Instead of liquidating or breaking a fixed deposit, you can apply to take a loan against FD. This way, you can continue to earn interest on your FD while it is being used as collateral for a loan. Typically, one can only claim 90% of the loan amount against your FD.
Every financial institution will have terms and conditions for the loan against an FD. An investor only has to submit a few documents to avail of this facility, as the bank or NBFC will already have most of the required information. Additionally, a CIBIL™ score check is usually not required when you apply for a loan against FD.
How Should You Select the Right Fixed Deposit?
Getting the best interest rate for your investment must be one of the most critical factors. The tenure, credibility, types and features of a fixed deposit are the other factors to consider to decide on the best-fixed deposit that suits your requirements.
Invest in a Shriram Fixed Deposit to get high-interest rates of up to 9.40%* p.a., including the additional interest of 0.50%* p.a. for senior citizens and 0.10%* p.a. for Women Depositors. A Shriram FD will help you develop a healthy savings habit. You can also be flexible in selecting the tenure and the interest payout on your fixed deposit.
FAQs
1. How do I choose the best-fixed deposit plan?
You can choose the best-fixed deposit scheme by considering factors like tenure, interest rate, financial institution's credibility, etc. It would be best if you looked out for the benefits and features you can get in an FD to help you achieve your financial goals faster.
2. Which FD gives the highest returns?
A cumulative fixed deposit gives the highest returns as the interest accumulated is also calculated towards the final amount earned. However, it would be best to remember that the payout for a cumulative fixed deposit can only happen upon maturity of the FD.
3. Which scheme in FD gives the highest rate of interest?
The interest rate depends on the tenure of the investment and the financial institution you choose. With a Shriram FD, you can get interest rates of up to 9.40%* p.a.
Key Highlights:
- With a credible financial institute, you can get assured returns with a secure investment.
- An FD offers a higher interest rate than a regular savings account.
- Invest in a Shriram Fixed Deposit to get high-interest rates of up to 9.40%* p.a., including the additional interest of 0.50%* p.a. for senior citizens and 0.10%* p.a. for Women Depositors.
