There are several low-risk financial investments available in the market but they cannot beat fixed deposits because of its several benefits. Fixed deposits work as a hedge against sudden expenses or any emergency. You can manage your financial risks and fulfill every financial goal at any stage of your life. Here are the benefits of fixed deposits that make it a better option over other investment instruments.
Fixed deposits are flexible in terms of tenors. FDs are available for 7 days to 10 years. You can choose tenor as per your financial goals. Whereas other safe investments like Public Provident Fund (PPF), Senior Citizens Savings investment scheme are long term investments without flexible tenor options. So, you will not be restrictive with FDs.
2. Premature Withdrawals
You can withdraw a Fixed deposit prematurely in case of any urgency. Even you can take the loan against your fixed deposits. It allows you to grant a 70-90% loan of FD value. Whereas the Public Provident Fund (PPF) has a lock-in period of 15 years and you can withdraw funds only after the 7th year of investment. If you have laddered your deposits with multiple deposits which have different maturity dates. You need not withdraw the entire amount of your FD. You can withdraw a small FD as per your requirement.
You can renew fixed deposits as many times as you want. If you want auto-renewals, you need to choose the option of auto-renewal facility at the time of opening an FD account. You can earn an extra 0.10% interest with Bajaj Finance on renewals as a reward. Whereas you cannot renew other investments. With other investments, there are terms and conditions regarding the term of the investment. For instance, in the Senior Citizens Savings Scheme (SCSS), you can invest for 5 years and renew it for a lock-in period of 3 years only.
4. Deposit Amount
With fixed deposits, there is no maximum limit to make a deposit or if there is any limit, it is very high. For instance, with Bajaj Finance, you can invest up to 5 crores in fixed deposits. The minimum limit is as low as Rs.25,000.
Let’s take the example of some schemes. An investor can deposit a maximum of Rs. 1.5 lacs annually in a PPF account. The maximum limit to deposit in SCSS is Rs. 15 lakh.
5. Loan against Fixed Deposits
Loan against fixed deposit accounts is available after 3 months of opening it. Whereas in the case of other investments, this waiting time is longer. For instance, Public Provident Funds, You can be granted a loan after 3 years for a maximum period of 36 months.
Against fixed deposits, you can get a loan of up to 80-90% of FD value whereas, with PPF, this loan limit is 25% of the total amount available in the account.
6. Interest Rates
Fixed deposits provide higher interest rates and some privileges also. Fixed deposits with Bajaj Finance offers such as extra benefits for senior citizens (additional 0.25% interest rate), additional 0.10% interest rate on FD renewals and interest rate benefit of 0.10% if you open an online fixed deposit account.
Thus, investors find fixed deposits more flexible and convenient than other investment schemes. You can calculate returns on fixed deposits before investing your funds using the FD rate calculator. It is a ready-to-use tool that eliminates all manual calculations to calculate interest on an amount to be deposited.
It is advised to investors that open fixed deposit accounts with a bank or other financial institutions bearing higher credibility ratings i.e. CRISIL AAA/STABLE and ICRA AAA/STABLE.