There can be many ways one can earn surplus funds. You might have a surplus fund coming from your business or have got a salary appraisal or something else. But investing them can be the best option rather than parking it in your savings account. Savings account investment cannot be as beneficial as a fixed deposit account. The interest offered by your funds is low in a savings account.
You can instead go for an investment in shares, mutual funds, purchasing gold or even FD. Investing is always a better option as it helps you in replication of your fund. Purchasing gold can be a good investment if you wish to sell it in future in case of an emergency to get some funds. Mutual funds can be your option when you want higher returns on your investments. Though this all involves a certain amount of risk, it also provides you with high returns. Fixed deposit is one where there is less risk involved compared to other investment options.
Bank and NBFCs providing best rate of interest on FD and it is the easiest way and a commonly preferred to save some funds in India. Fixed deposits are measured as a safer option as opposed to the stock market and mutual funds. Term deposits can be of two types: fixed deposits and recurring deposits.
Fixed deposits are a onetime investment option where you will devote all your funds at a single time. If you opt for recurring deposits, you will have to invest your funds regularly over a period of time. The procedure of the fixed deposit is very easy and it is considered extremely secure.
FD is a secure option compared to other investments. Also, it can be best if you are planning to walk on a safer side regarding the investment plans. Fixed deposits provide with interest that can offer you a higher returns.
Now fixed deposit interest rates can depend upon the tenure of your investment and also on the amount you wish investing. Interest rates offered by banks also vary from bank to bank. Some banks offer higher interest rates whereas some offer low. Many small and private sector banks offer a high rate of interest on the fixed deposits in order to attract the general public. You can check out before investing your saving that how much interest you will earn through FD with the help of best fixed deposit interest calculator tool.
Not only banks but Non-Banking Financial Companies (NBFCs) also provide fixed deposits. NBFCs offer a higher rate of interest compared to banks on their fixed deposits. The RBI has agreed with offering 12 percent of the rate of interest by NBFCs to their investors in fixed deposits. Whereas normal banks offer 9 percent of interest rates to their fixed deposit investors. The higher rates can attract the general public making them forget about the risk involved in NBFCs investments.
Fixed deposits restrict you from withdrawing funds before its maturity. If the withdrawal of the fund is before the maturity you have to pay penalty to the bank. Also, this may lead you getting a lower rate of interest. The solution to this is that you can draw a cheque overdraft which will give you the freedom to withdraw about 90% of the amount. When you withdraw the amount through overdraft facility you have to pay off interest to the bank on the last date of the overdraft.