The Benefits of Fixed Deposits: Why They’re Still a Popular Choice

In today’s ever-evolving financial world, where newer and more complex investment options pop up every day, one investment that stands out every time is Fixed Deposits (FDs). For generations, FDs have proven to be a go-to choice among investors as they ensure safety, low risk, and good returns.

But in the digital age, why are FDs still a popular investment option? Before investing in FDs, let’s dive into its benefits, how to apply them, and things to consider.

What is a Fixed Deposit?

A fixed deposit (FD) is a financial instrument offered by banks and other financial institutions, where individuals invest a lump sum of their sum for a set period of time at a fixed interest rate. In an FD, during the chosen tenure, the return earned is guaranteed, and at its maturity, the investor gets the principal amount with the accumulated interest.

Common Types of FDs:

• Standard FD: Individuals invest their money for a set period and get fixed returns.
• Tax Saving FDs: The deposit lock-in period is five years, and investors get a tax exemption of up to ₹1.5 lakhs.
• Senior Citizen FD: Offer a higher interest rate for people aged 60 years and above.
• Cumulative and Non-Cumulative FD: In cumulative FDs, interest is compounded and paid out with the principal amount at the end of the maturity. However, in non-cumulative FDs, interest is paid at regular intervals, monthly, quarterly, half-yearly, or yearly.

What are the Benefits of a Fixed Deposit?

There are numerous reasons why fixed deposits are the popular choice for investors, and here are some of them:

• Fixed Returns: FDs assure the investors they’ll get a guaranteed return throughout the term. It’s an investment where the individuals get a stable rate of return, potentially more than a regular savings account.
• Low Risk: Amongst all the investments, FDs are the safest and most attractive option. They are not impacted by market fluctuations, and the returns are guaranteed.
• Regular Income: If you choose a non-cumulative FD, you’ll receive a regular amount of money, making it a good option for retirement or to cover regular expenses.
• Liquidity: You can encash the FD whenever you want without any restrictions. Although it may charge a premature penalty, the option is best to opt in case of unexpected situations or emergencies.
• Tax Redemption: If you plan to get an FD with a tenure of 5 years, you’ll get tax deductions of up to ₹1.5 lakhs with guaranteed returns.

Convenience of Opening a Fixed Deposit Online

Unlike traditional times, opening an FD online has become incredibly popular due to its convenience. You can apply for one in the comfort of your home. Here’s why:

• Paperless Process: Avoid lengthy paperwork and complete your application online.
• Time-Saving: With everything done online via mobile phones, the process has become more convenient and quick, saving you time of visiting the banks.
• 24/7 Accessibility: Open an FD at your convenience and manage the account with mobile apps.
• Easy Payment: Make the payments easily through net banking.

Eligibility Criteria and Documents Required for FD Online

• You should be an Indian citizen (at least 18 years of age).
• You must have a valid PAN Card and KYC documents (Aadhar Card, Voter ID, Passport, or Driving License).

Fixed Deposits Vs Other Investment Options

While it is evident that fixed deposits don’t offer returns as high as other investment options like mutual funds and stocks, the safety they provide and the guaranteed returns they offer make them a first choice among many investors. If you are looking for an option to preserve a sum of money for a longer period of time without any risk and fixed return, then FDs are the clear winner.

However, FDs offer higher returns than options like regular savings accounts, making them attractive to many investors.

Bajaj Finance Digital Fixed Deposit

Bajaj Finance Digital Fixed Deposit is a trusted online financial platform that stands out for its high returns, flexibility, and security that it offers to investors. Here’s why Bajaj Finance FD is a great choice:

• Offers a higher interest rate of up to 8.65% per annum for a tenure of 42 months.
• You can choose the tenure that best suits your financial needs.
• Senior citizens (above the age of 60 years) get an additional 0.40% per annum.
• The application process is entirely online, and you don’t have to visit any branch.
• Choose flexible interest payout options (monthly, quarterly, half-yearly or yearly).

Here’s how you can apply for Bajaj Finance Digital FD:

• Go to the Bajaj Finance website or use the mobile app.
• Verify your mobile number and complete the online application.
• Choose the investment amount, tenure, and interest payout options.
• After completing the KYC, make the payment online (using NetBanking / UPI or NEFT / RTGS)
• Get the acknowledgement and e-FDR via email.

Tips to Consider Before Investing in Fixed Deposit

Before investing in an FD, read the following tips:

• Do your research and compare interest rates offered by different platforms.
• Select the tenure of maturity that best aligns with your financial goals.
• Read all the terms and conditions and check if any premature penalties are charged.
• Check if the provider offers flexible payout options.
• Learn about the tax implications, whether the interest earned is taxable and whether the fixed deposit qualifies for tax benefits.

Wrap Up

With numerous options available in the marketplace, even today, fixed deposits have continued to be the safest and most reliable investment options among people. From guaranteed returns to tax benefits, it offers everything. With the introduction of online FD, the application process has become easier than ever. Don’t forget to consider factors like tenure, compare interest rates and read all the documents carefully to make sure you make an informed decision.

Disclaimer: This article is part of sponsored content programme. The Tribune is not responsible for the content including the data in the text and has no role in its selection.