6 Key Things to Look At While Investing In FDs

If you are an investment novice and wondering what is fixed deposit account or how to choose the right one, here are some tips to consider.

1. Interest Rate Comparison

When you compare FD interest rates on various FD schemes, do consider both bank and NBFC options. Corporate FDs offered by NBFCs always offer higher interest rates as compared to bank FDs. Many NBFCs such as Bajaj Finance offer up to 7.85% rate, one of the highest rates across all time deposit scheme providers.

2. Credibility of the FD Issuer

While FDs provide assured returns, you should nevertheless check the credibility of the FD issuer. For example, when you park your money in Bajaj Finance FD, you can have complete peace of mind. It is the only Indian NBFC which has been accredited with ‘BBB’ international rating by S&P Global. CRISIL and ICRA have also given its FD the highest stability ratings of FAAA/Stable and MAAA  (stable) respectively.

3. Interest Payout Options

Interest payout option

If you are a senior citizen, choose a non-cumulative FD that gives monthly, quarterly, half-yearly or yearly payouts to support your monthly expenses post-retirement. 

Cumulative FDs are a good option when you can stay invested for the entire tenor of the FD. Here, the interest is paid annually and it gets reinvested every year on the principal amount. So, your investment grows using the power of compound interest.

Look for FDs that offer both cumulative and non-cumulative options. You can compare the returns and growth in both using an accurate, online fixed deposit interest calculator.

4. Laddering deposits maximization of returns

Laddering feature allows you to invest in multiple FDs with varying maturity periods and interest payment frequencies. It works on the principle of maximization of returns due to averaging out of interest rate fluctuation in the long term. Another advantage of laddering is that you can prematurely break a standalone FD instead of the entire corpus.

5. Monthly Fixed Deposits

If you have started a new job or have limited income, you should look for a time deposit scheme that gives you the option of making small monthly deposits. This will grow your savings in a disciplined manner with minimal effort. Bajaj Finance FD offers a unique feature called Systematic Deposit Plan (SDP) where you can invest as low as Rs. 5000 every month for 12 months to 60 months.

6. Loan Against Fixed Deposit

Loan against deposit

Premature withdrawals on FD can be done only after the completion of the lock-in period. So, invest in a scheme that gives you up to 75% of the loan of the FD value anytime during the tenor. This will also save you loss of interest.

FDs are the most sought-after investment option among investment beginners or have low-risk tolerance for market volatility. The best FD scheme is one which offers a high-interest rate, maximizing your returns and offers value-added benefits such as laddering and monthly deposit plans. Bajaj Finance FD is one of the few investment options that meet all criteria of a good FD investment. You can compare various FD schemes using a fixed deposit interest calculator before making a decision. Doing thorough research on all parameters is the key to ensuring the safety of your investment. 

This is the best time to lock-in existing high FD interest rates before the rates go further down as they have been moving downwards since the beginning of the last year because of reduction in repo rate.

About the Guest Author

Gaurav

Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.


Related Articles

Leave a Comment