If you enquire for any low-risk investment options, a fixed deposit (FD) is the most recommended option. It is designed for risk-averse investors that guarantee a fixed amount on its maturity. The FD interest rates offered are different by each financial institution but range between 5% to 9% rate. Some institutions offer an additional 0.5% of FD rates for senior citizen depositors.
Let us gather an understanding of how fixed deposit works.
Investing in fixed deposit locks your amount for a specified duration. The financial institution accumulates interest on the principal sum and pays or credits it to your account as per the terms and condition of the investment. There are options for different tenures and you can manage different fixed deposit investment based on your investment objective. The fixed deposit facility is not only restricted for residents, but also for NRIs (Non-resident Indians) in the form of NRE (Non-resident External) and NRO (Non-resident Ordinary) FDs.
Read more to know about the different types of Fixed Deposit –
Normal Fixed Deposit Scheme
This is a regular fixed deposit scheme where you could invest for a duration of 7 days to 10 years. The interest rate varies across different financial institutions but is generally in the range of 6% to 9%.
Tax Saving Fixed Deposit Scheme
When you deposit in this scheme, you can avail a tax exemption up to ₹1,50,000 in each financial year. There is a lock-in for a duration of five years from the date of its investment. The investor is allowed to deposit once in a lump sum amount.
Senior Citizen Fixed Deposits
This type scheme has fixed deposit eligibility for senior citizens only, i.e. those above 60 years of age. Flexible tenures are available to choose from. An advantage to this scheme is the added rate of interest that is offered to the investors over the normal scheme in almost every deposit accepting organisation.
Cumulative Fixed Deposit
In this type of fixed deposit, the interest is compounded at each quarter or half-year but is paid at the time of maturity. The compounding factor helps your money grow significantly as compared to other schemes.
Non-Cumulative Fixed Deposit
This fixed deposit scheme is for the pensioners who seek to earn from the lump sum amount earned at the time of retirement. Non-cumulative fixed deposit schemes offer regular payouts. It can be of financial assistance to the retired by providing them with a certain income periodically.
Not only Indian residents, but the residents who stay abroad earning in foreign denominations also prefer investing in fixed deposits within the country. For such individuals there are NRE and NRO fixed deposits too.
There isn’t a second thought about any better alternative for investment in times of trembling stock markets and declining rate of returns for other forms of investment. Get the best Fixed deposit by comparing all available options.
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