Benefits of Having a Fixed Deposit Account
Benefits of Having A Fixed deposit Account are one of the simplest ways to ensure that your savings do not sit idle. Your money literally makes you more money in a fixed deposit, and you can have your funds for a rainy day.
Fixed deposits have a number of benefits like lower risk and higher interest rates than a typical savings account.
Fixed deposits are saved over a specified period and once it reaches maturity you can either withdraw or renew your fixed deposit account. Fixed deposits are low-risk investments as compared to other investments like mutual funds, shares etc. Fixed deposits have numerous advantages which can be availed by investors, below are some of the advantages of opening a fixed deposit account.
1. Higher and Assured Returns| Benefits of Having A Fixed Deposit Account
Benefits of Having A Fixed Deposit Account: Fixed deposits generally offer a healthy rate of interest of 5% to 7.5 %. In comparison, your savings account offers you a lesser rate of 3.5% to 6%.
In addition, the returns are assured with interest when fixed deposit reaches maturity after a specified amount of time.
2. Promotes Savings Habit | Benefits of Having A Fixed Deposit Account
Benefits of Having A Fixed Deposit Account:With fixed deposit accounts having a certain lock in period, you are encouraged to save more and withdraw the amount only on maturity.
This, in turn, helps to develop and promote a savings habit.
3. Flexible Period Levels | Benefits of Having A Fixed Deposit Account
Benefits of Having A Fixed Deposit Account:The time period for which fixed deposits can be held is flexible. Depending on the bank the period can range from 7 days up to 10 years. You can choose the period according to your convenience and invest in any bank even if you do not possess an account over there.
4. Emergency Fund | Benefits of Having A Fixed Deposit Account
Benefits of Having A Fixed Deposit Account:Fixed deposits are useful instruments which have a lower risk as compared to market linked plans or mutual funds. Fixed deposits can be easily converted into cash anytime, of course, there is an interest related penalty involved in premature withdrawal. You can also take a loan against your fixed deposit account. Banks generally allow you to take a loan of up to 60 to 90% of the deposited amount.
5. Tax Benefits | Benefits of Having A Fixed Deposit Account
Investments in Tax Saver fixed deposits can help save tax. A maximum amount of Rs. 1,50,000 can be claimed as tax benefit under section 80C, Income tax Act, 1961.
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6. Fixed Term Interest rates | Benefits of Having A Fixed Deposit Account
Fixed deposits are also called Term Deposits because the amount is invested for a particular term. For that term, your rate of interest is fixed and cannot be revised.
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7. Flexibility in Payable Interest | Benefits of Having A Fixed Deposit Account
The rate of interest is payable annually or monthly depending on the term period that you use.
8. Multiple Accounts | Benefits of Having A Fixed Deposit Account
You can invest in more than one fixed deposit account if you desire to do so, this totally depends on your saving goals.
Fixed deposits are still an attractive mode of investment as compared to other investment plans in the market. They provide higher returns and are stable and safe. They are not prone to fluctuations of the market unlike other market linked financial plans.
Fixed deposit is a useful tool to invest for all ages. Working men and women can save part of their savings and convert them into fixed deposits. It is especially useful for senior citizens who have no current source of income. Senior citizens are generally less inclined to take financial risks at their age. Fixed deposits help them to have something to fall back upon in times of crisis or medical emergencies.