If you’re looking for a stable investment option, you should consider Fixed Deposits (FDs). They offer assured returns on your investment and are a safe and secure way to grow your savings. Fixed deposits provide peace of mind, knowing that your money is working for you without any major risk of loss. So why not invest in fixed deposits and enjoy the benefits of a stable investment?

What are fixed deposits and How do They Work?

Fixed deposits are a popular form of investment where an individual deposits a lump sum amount of money with a bank or financial institution for a fixed tenure at a fixed rate of interest. 

The interest rate on fixed deposits is usually higher than that of a savings account. The interest rate varies depending on the tenure, amount deposited, and the bank or financial institution offering the fixed deposit. The fixed deposit rates are usually higher for longer tenures and higher deposit amounts. The interest earned on fixed deposits is usually compounded annually, which means that the interest earned is reinvested and earns further interest.

Fixed deposits can be opened by individuals, joint account holders, and even organisations such as companies and trusts. The tenure of a fixed deposit can range from as little as 7 days to as long as 10 years. Once the tenure of the fixed deposit is over, the individual can choose to withdraw the money or renew the fixed deposit for another tenure.

When and How Does Fixed Deposit Rates Accrue?

Fixed deposit rates accrue based on the terms and conditions of the specific bank or financial institution you are dealing with. These terms might include the amount of the deposit, the duration of the deposit, and the interest rate offered. Generally, the longer the duration of the deposit, the higher the interest rate offered and the more money you will earn in interest over time.

It is important to note that fixed deposit rates are fixed at the time of deposit and do not change throughout the deposit. This means that you can be assured of a fixed return on your investment. However, in case you need to withdraw your deposit before the maturity date, you might have to incur a penalty.

Therefore, it is always advisable to read and understand the terms and conditions before investing in a fixed deposit. With a little research, you can find the best rates that suit your financial goals and investment strategy.

Loan Against Fixed Deposits

A loan against fixed deposits (FD) is a type of secured loan. It is a better option than unsecured loans like personal loans as it has a lower interest rate. The interest rate on a loan against an FD is usually 1-2% higher than the interest rate earned on the FD. However, this is still lower than the interest rate on an unsecured loan. 

One of the biggest advantages of taking a loan against FD is that you can continue to earn interest on your deposit while using it to secure a loan. This means that you can continue to grow your savings even while repaying the loan. This makes it a great option for people who need funds but do not want to break their FD prematurely.

Another advantage of taking a loan against FD is that it offers a flexible loan amount. You can take a loan amount that is equal to or less than the value of your FD. This means that you can get a loan of up to 90% of the FD value. The loan amount also depends on the bank or financial institution you are borrowing from. 

All in all, taking a loan against FD is a great option for people who need funds but want to keep their FD. It offers a lower interest rate than unsecured loans like personal loans, and you can continue to earn interest on your deposit while using it to secure a loan. 

Starting with Fixed Deposits – Should You Use a Calculator?

A fixed deposit calculator is a tool that helps you calculate the interest earned on your fixed deposit based on the deposit amount, tenure, and interest rate. It provides you with an estimate of the maturity amount and the interest earned on your investment.

Using a fixed deposit calculator can help you make an informed decision about your investment. It can help you compare the interest rates offered by different banks and financial institutions and choose the one that provides the best returns.

Moreover, a fixed deposit calculator can also help you plan your investments better. You can use it to calculate the interest earned on different deposit amounts and tenures and choose the one that suits your financial goals.

Conclusion 

Fixed deposits are a safe and secure investment option that offers assured returns at a fixed rate of interest. With the flexibility to choose the tenure of the investment, fixed deposits are an ideal way to grow your savings with low risk. Additionally, the option of taking a loan against FDs and using a fixed deposit calculator can help you make informed investment decisions. So, if you’re looking for a stable investment option, fixed deposits are worth considering.