When you accumulate your savings, you may be wondering how to use them to your best advantage. Putting them into a safe FD scheme will help you grow your savings and use them to fulfil a personal goal like buying a car, or during times of need such as a medical emergency.
An FD is also a popular choice for retirement savings as they are free from market fluctuations and offer guaranteed returns. So, not only can Starting an FD help you multiply your wealth, but also keep in it secure.
Here are some reasons you should put your savings in a fixed deposit.
1. It offers good returns that aren’t linked to market volatility:
Market forces can be extremely unpredictable and often lead you to lose money instead of making good gains. Fixed deposits, on the other hand, provide you with good returns and are independent of the market in the sense that your investment is locked-in at the interest rate at the time you started your FD.
The rate does not fluctuate until the end of the tenor, which means that you can count on your interest earnings, and get your entire invested corpus back at maturity. This helps you safely preserve your savings. For example, you can invest in the Bajaj Finance Fixed Deposit and get a high rate of interest, which helps you grow your funds steadily, over time.
2. It allows you to check ratings before investment for added safety:
Company FDs are chosen over bank FDs because they offer higher interest rates. To help you choose a safer company FD, you can check their ratings. An AAA rating for any FD signifies that the company issuing it is highly creditworthy. So, compare different company FDs based on their safety ratings and select one that offers the highest level of safety. Always look for an FAAA/stable rating by CRISIL or an MAAA (stable) rating by ICRA such as the Bajaj Finance FD.
3. It lets you choose the tenor of your choice or ladder your investments:
Based on your financial goals, you can choose an FD tenor between 12 and 60 months. For example, if you want to buy a car in two years, you can choose an FD that will maturity in two years, and use the funds for your car purchase. This flexibility can help you access your investment when you need it.
Secondly, there is no limit on how many FDs you can start. So, you can ladder your FDs. This enables you to have multiple FDs with ranging maturity dates. Not only does this help you maximise your returns, but also enables you to get tax exemptions on interest earnings by timing your FDs correctly.
For example, you can time the maturity dates of your FDs from September or October to avoid coinciding with the end of the financial year.
4. It can be pledged as collateral for a loan during a cash crunch:
When you have a medical emergency, lose your job or need to support a family member for any reason, you need access to quick cash. When you have an FD, you can use it to meet your financial obligations with ease by taking a loan against your FD. This is better than liquidating your FD, in which case you will lose out on interest gains and also need to pay a penalty.
These are some benefits you can gain from by investing your savings in an FD scheme. Before you proceed, make sure you research the market thoroughly and review your investment portfolio. Also make it a point to decide on the amounts that you seek to invest and use an FD Calculator to see how much you stand to earn.