Fixed deposit is one of the safest forms of investment. Yes, that is a fact which an investor cannot ignore. But the service of fixed deposit provided by the lenders differs from one another. There is an existing myth that banks offer better deals on fixed deposits than other financial institutions which they think are not trustworthy. Well, this ideology has to be changed. If you too feel the same then your perception needs to be changed as per the current market.
In fact, more than Banks, Non-Banking Financial Companies (NBFCs) are the ones who are stealing the limelight. They provide attractive rates which are one of the best in the financial market. Apart from that, they are offering flexibility which is not just better than the banks but as well as the other lenders. The interest they are providing on fixed deposits is better than their financial institution’ counterparts. Thus, this is the time that investors can get away with this myth when it comes to investing in a FD.
Furthermore, to make the issue more clear, let us understand the current fixed deposit scenario. Firstly, a lot of investors who are above the age of 40 would remember that there was a time when bank used to offer FD rate around 10%; even 12% at a certain period. However, those days are long gone and hardly any well-known bank that you know offers in excess of 7%. And if any bank has a higher cap of 8% then consider yourself lucky. However, the question here is – Do you really need to resort to banks for investment in fixed deposits?
The answer is no! There are other favourable options. Let us take an example, Primarily investors investing in fixed deposits must not have unrealistic expectations. For the same, it is essential that you use online tools such as fixed deposit calculator to get a fair knowledge about the same. Moving on to the point, many people think that just because it is the bank, 7% is favourable because the funds are safe and secured. If that is the case then you will be disappointed to know that you loose almost 30%-51.7% earnings in a 5-year period if you do not consider other options.
There are various Non-Banking Financial Companies (NBFCs) which are offering a rate of interest in excess of 8%. These financial institutions are well-known and sought after entities when it comes to investment in the fixed deposit avenues. However, most of the people do not consider this option. And that is because of their conservative approach towards investing in them. If you have a similar approach, it is not that you are wrong, it is just that you can be wiser when it comes to investing in a fixed deposit. A percent more can help you get considerably increased income when the tenure completes. Thus, it is essential that you make the most out of this by exploring new investment options.
Any investor would know that the high inflation is a major stumble block these days. Fixed deposits in banks cannot preserve your value of money. The amount that you are saving with the banks through savings account is nothing more than a donation to them. One of the most delusional modes of investment, there has never been a period where the interest rate has reached near the inflation rate. It is essential that you explore all the avenues before investing. Be open to investing in NBFCs and other financial institutions to make the most out of the situation.