Investment is a great method to build wealth. Investing funds in different schemes helps you to increase the value of your investments. Having no investment strategies might leave significant profits on the table but wise investment planning attracts potential gains.
A major part of the investment is deposited in fixed deposits. A long-term investment planning is more lucrative than short-term. Bank fixed deposits allow investors to liquidate their funds anytime that can be utilized during a financial crisis.
Unlike savings accounts, the fixed deposits are likely to offer higher rates of returns to the beneficiaries. For senior citizens, every bank or corporate entity offers more interest rates than people below the age of 60 in fixed deposits.
Why Should You Start Investing?
To generate consistent income at your retirement age, here are listed some advantages of investing:
- Funds' Growth
Investment grows your funds steadily within a specific time period. Segregating a part of income now can be fixed for a specific time period to secure your future. Provided interest rates in fixed deposits increase the value of the funds and you get assured returns.
2. Retirement Income
Investing right from the time when one starts working is a wise term plan for retirement. Investors get to live off funds at the retirement age. Moreover, based on your risk appetite, the investors can extend their areas of investment and diversify their investment portfolios. In fixed deposits, it generates a consistent income for the investors.
- Higher Returns
Usually, in a savings account, the investors leverage the investment benefits at the rate of 3-6% depending on the type of bank. For considerable growth of the funds, the investors have to put it in a place to yield more profits. Fixed deposits allow a higher rate of return over bank savings.
To analyze your profitability at the end of your fixed deposits investment plans, you can start with some of the leading banks of India, for eg. you can check HDFC FD rates which offer fair interest rates to entice their customers.
- Achieving financial objectives
Effective investment plans push you to reach financial goals. If you are indulged in fixed deposits, the investors are more likely to get higher returns speedily which in turn, can be used to meet financial objectives.
5. Starting a business
If you have a plan to start a business, investing plays a vital role to start and expand your business. Investment contributes to generating and elevating investment thereby boosting your future securing policies.
- Loan against fixed deposits
Fixed deposits can be used as collateral to get a loan from banks. Most often, citizens don't get a loan due to incompetence to repay it. But the investors proactively investing regularly in fixed deposits can apply for a loan. Although it is an expensive process, it saves to counter tough times.
How to manage multiple FDs in banks?
Investors can open any number of accounts in any bank as per the terms and conditions of the banks. Here are the ways to manage your multiple fixed deposits in banks:
- Fixed deposits are taxed at 10% TDS (Tax Deducted at Source) on the condition if interest income exceeds the range of Rs. 10,000 in the fiscal year. However, the tax liability is determined by banks for their different branches.
To save TDS, the investors can open multiple FD accounts in different branches of the same bank.
Alternatively, family members can open FD accounts in the same bank as it saves the investors to pay due taxes and not before time.
- Having multiple accounts helps in the circumstances of cash crunches. If an investor has various accounts, then he/she is eligible to withdraw funds from more than one account without affecting other accounts to continue to earn interest in some part of your investments.
- If you are gaining enough interest on FDs, you opting for reinvestment is indeed a good option to multiply investments. This way, you can manage your interest income easily. It increases the profitability year on year. However, the investors can opt for an interest payout for other FD investments and use the interest amount for other expenditures. A reinvestment strategy is most suitable for longer-term deposits. Alternatively, deposits for shorter compounding periods are also beneficial.
- In case of the falling interest rate, multiple FDs with different investment tenure help the investors to generate higher returns. If any fixed deposit is not performing well enough to increase profitability, the investors can break the FD and reinvest in the one offering higher interest rates.
It won't ravage your investing benefits but elevate the earning potential. You can also avoid premature withdrawals to a certain extent.
- Technological advancement
If the beneficiary has an FD account in a single bank, they can use the online net banking services of the bank to transfer to book, view, and redeem online FDs.
Holding deposits in different banks and monitoring allows viewing and managing multiple accounts using several online apps. The technological advancement summarizes FD details in real-time. However, that being viewed only tools cause no harm to your data.
Are NRIs eligible for fixed deposits?
Fixed deposits are for Indian citizens but NRI (Non-resident Indians) are eligible to open FD accounts in Indian banks in the form of NRE (Non-resident External) and NRO (Non-resident Ordinary) FDs.
If the NRIs have savings accounts in any Indian bank, they can open an FD account in that bank.
In case, the applicant doesn't have a savings account, they can avail of FD benefits offered by several banks. It requires a KYC (Know Your Customer) process and relevant documents to authorize yourself as a trusted citizen of the nation.
To manage and monitor your funds, having an investment plan is a great strategy. With no major effect on your pockets, you generate long-term wealth for yourself. There are several investment options offered by banks or other entities but fixed deposits assure guaranteed returns irrespective of market fluctuations. Your returns aren't affected by external factors. Additionally, it imparts more benefits to senior citizens with higher rates of interest with 0.25%-0.65%.