Maximum Returns On Your Investment

 Fixed deposit offers guaranteed returns. We can also get better benefits of high-interest rates, which can help us to grow our retirement savings. We may also get attracted towards the company fixed deposits offering higher interest rates. It is also important to ascertain the safety of our investment by choosing the correct company fixed deposit issuers which are having high safety ratings by credit rating agencies.

There are two such credit rating agencies they are CRISIL and ICRA which provide the best opinion on the safety of a debt instrument. When we are choosing financiers, it is mandatory to check the safety ratings, so that our investments are out of danger.

How to maximize returns on your investment?

Choose the right financier: Generally, fixed deposits are offered by both companies and banks as well. So, investors who are seeking higher returns may choose to invest in companies fixed deposits, which can offer higher interest rates.

Renewing fixed deposits periodically: we can renew our fixed deposits to earn extra interest and profit from the power of compounding instead of withdrawing maturity proceeds. When we are renewing our fixed deposits, we will get extra interest rates, which are offered by most banks and NBFCs.

Grow Tax Savings- Interest income from fixed deposits held at a bank or post office was exempt from TDS up to 10,000. In recent years it was increased to 40,000. For regular investors and up to 50,000 for senior citizens so that we can increase our savings furthermore.

Laddering Your Investments- We should also consider investing in various fixed deposits to ladder our investments with various tenors, which can help to get Seven things to know before investing in an FD.

Essential things to know before investing in a Fixed Deposit

Fixed Deposits (FDs) are one of the safest and preferred investment options available to those who are thinking to invest in risk instruments such as equity and mutual funds. FDs let you manage your financial risks and help you to fulfil your goals and aspirations for different stages of your life. These could involve securing your child’s future, their education and marriage and so on. Such deposits are also an intelligent way to increase savings over a couple of times.

However, before you invest in an FD, you need to consider the following points:

Safety: Fixed deposits are the most secured investments that offer assured returns. Fixed deposit offered by private companies and HFCs are rated by credit rating agencies so that investors can choose intelligently. If you are planning or want to invest in a corporate FD, always go for corporates that are giving high rates.

Minimal Deposit: Different companies have different minimum and maximum deposit amounts. It is important to check with the company before we are investing. At PNB Housing, the minimum amount is INR 10,000 is to be put in a fixed deposit.

Tenure: Generally, most corporates offer deposits for a period anywhere between 1 year to 10 years. Be careful in choosing the tenure, as premature closure of an FD attracts a penalty that will decrease the total interest earned on your fixed deposit. For example, if you need the money after three years, then make sure you have to invest for a period of three years or less.

Interest Rate: some banks and private companies offer fixed deposit schemes that pay interest on a cumulative and non-cumulative basis, based upon the choice the individual makes. Customers looking for a regular income on a monthly, quarterly, half-yearly or annual basis can go for non-cumulative schemes. For investors looking for savings and return earned over a long period of time, they can choose cumulative schemes where both the principal and accumulated interest is paid on maturity. 

Nomination: It is necessary to exercise the nomination option in fixed deposit, more so if you are the sole depositor. If the depositor is dead, then the sum can be collected with all interests.

Tax Deduction at Source (TDS): The interest income from a particular corporate fixed deposit is more than INR 5,000, and then the company has to deduct tax at source beyond that amount. Therefore, INR 5000 is the limit for a TDS of an HFC.

Benefits for senior citizens: Corporate fixed deposits are a good investment choice for senior citizens as they give them better and safe returns with an alternative of regular income, in their retirement years. Interest rates which are offered to senior citizens fd rate are generally 0.25% higher than the standard rates offered.

For all of these above-mentioned reasons, fixed deposits are a safe and better strategic investment that provides the two goals of providing regular income.

Fixed deposits help us in reaching recurring and non-recurring expenses alike

Apart from meeting your daily expenses, as a retired person, you may have other non-recurring expenses and goals to achieve. For instance, if you want to give a property to your children, or to conduct a marriage, throw a grand party, make a prepayment of your home loan and many more. To pay for each need smoothly, you can ladder your fixed deposits over varying tenures and align them to various goals. In this way, you will always have funds at your disposal to tackle your needs on time.

Fixed deposits can be pledged as collateral to avail a loan in emergencies

Emergencies can occur anytime in your life. For a senior citizen, this may take place often in the form of medical treatments and so on. To help you in such times, Bajaj Finance lets you pledge your Fixed deposit as collateral and avail a loan against it. You can also apply for this loan online and get a sanction of up to Rs.4 lakh almost instantly! In this way, you can address your emergency without losing your investment and keep earning interest on it until maturity.

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