Features and Benefits of a FD: All You Must Know
Investing ensures that you have some future financial security. It also helps you to achieve your financial goals, be it long-term or short-term. It helps you create wealth over a long period of time. For a risk-averse investor, investing in fixed deposits is one of the best modes of investment. Opening a fixed deposit account is also very easy and hardly takes any time.
What is a fixed deposit?
A fixed deposit or FD is a financial instrument in which your money is locked in for a fixed period of time in a bank or Non-Banking Financial Company (NBFC) at a fixed and predetermined rate of interest. Once this fixed period of time ends, you can withdraw your investment or choose to reinvest the same for another term.
The best part about an FD (fixed deposit) is that no matter how the market is fluctuating, your maturity amount is fixed and is guaranteed. It is one of the safest modes of investment as it is always under the purview of the Reserve Bank of India (RBI). You can choose to either get your fixed deposit interest amounts at fixed intervals of time or in one lump sum at maturity along with the principal amount.
Some of the features of a fixed deposit are:
- Fixed deposit interest rates offered are higher than savings accounts.
- Fixed deposit renewal is a very simple process and hardly takes any time.
- Senior citizens often receive higher fixed deposit rates of interest.
- You can either opt to receive periodic interest payouts or lump sum payments at the end of the maturity period depending on your financial goals. If you want to meet your monthly expenses, you can opt for periodic interest payouts, for more long-term goals you can opt for the lump sum option.
- You can make deposits that range from as short as seven days to as long as 10 years.
- Withdrawals cannot be made before maturity. However, due to some financial emergency, you have to make a withdrawal, then a penal amount will be deducted.
The top benefits of a fixed deposit are:
- You get fixed returns that are not affected by market highs or lows.
- It is almost completely risk-free and therefore there is little to no risk of loss of principal amount.
- Investing in fixed deposits has tax benefits and you can claim deduction under section 80C (Rs. 1.5 lakh benefit including other deductions available under the section).
- Opening a fixed deposit (FD)account is very simple and hassle-free.
- You can avail of a loan against your fixed deposit in case of any financial emergencies.
- Flexible tenures are one of the biggest advantages of fixed deposits.
For someone who doesn’t like taking risks, a fixed deposit is the best way of investing. Longer the tenure of the fixed deposit, the higher the returns due to the compounding effect.
PNB Housing offers very competitive interest rates for fixed deposits. So, what are you waiting for? Go open a fixed deposit account with PNB Housing and start investing!
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