Pros and Cons of Investing in Fixed Deposits

Fixed Deposit is a popular investment arrangement made available by NBFCs and banking institutions. It assures the utmost safety and security of the deposited funds. In addition, you can also earn a steady rate of interest for a scheduled time period. Moreover, the entire arrangement is also independent of the prevailing market situations. Thus, the investors can attain financial stability in the long run. kuşadası escort

Investing in a fixed deposit is quite a hassle-free task. Applicants can either visit in person or simply apply fixed deposit online through the bank’s website. According to the bank policy, you may or may not have to open separate accounts for enrolling in a fixed deposit scheme. Fixed deposits or FDs provide a higher rate of interest than regular savings accounts. On the other hand, the fixed deposits acquire low-risk returns compared to other tools of investment . These include, stock markets and equity schemes. 

Before you Open fd account online or offline, go through the list of Pros and Cons given below. This way, you will be able to weigh your options and make planned investment decisions.

Fixed Deposit PROS:

Steady returns on investments

Usually, the interest rates of fixed deposits are stable until their maturity date arrives. The prevailing market situations do not hinder them. For example, if a person opens a fixed deposit account in a bank with 4 years. The tenure of repayment at an interest rate of 6% per annum, will remain fixed until the 4 years time period. Also, you can get an assurance for an extent of income via Fixed Deposits. The returns are sometimes higher than what is provided by most small saving schemes. 

Deposit insurance cover protection

Fixed deposits, when opened with specific banks, are entitled under deposit insurance scheme issued by the Deposit Insurance and Credit Guarantee Corporation, which is a subsidiary of the Reserve Bank of India. The insurance cover is relevant on cumulative bank deposits, including savings account, fixed deposits, recurring deposits and current account of up to Rs. 5 lakhs per bank and per depositor in case of unprecedented events like bank failures. dikmen travesti

Loan availability against FD

Many banks offer loans on fixed deposits that are available as an overdraft (OD) facility. You can get the credit limit  based on the FD amount provided being kept as collateral. The individual gains interest on the FDs that remain in the bank account during the loan tenure, which is immensely satisfying. Borrowers can withdraw as much money they require up to the amount permitted according to their overdraft account and pay it back based on their individual payback capacity.

CONS:

Low Returns

We have deliberated about the assured returns on savings that Fixed Deposits offer. But these returns are low compared to other lucrative yet riskier schemes. Even short-term market-linked schemes offer better interest rates. Before applying for a fixed deposit scheme, it is wise to compare fd rates offered by different banks and NBFCs. Once you are finally sure with your bank, you will start earning assured returns on the deposited savings, irrespective of the fluctuating interest rates within the banks but the returns are still relatively low. It is best to be careful and calculative about choosing an FD scheme in any bank. seyranbağları travesti

Premature withdrawal penalty

Banks do charge between 0.5% to 1% as a penalty for premature closing of fixed deposits. The penalty rate is cut off from the rate of interest on effect. It is lesser than the actual FD rate that was offered at the time of making deposits. This may lead to a problematic situation when the investor has to withdraw money for an emergency purpose. The investors can however look for any other investment schemes to secure the required amount. esat travesti

Non-tax-free FD interests

Interest from Fixed Deposits, including FDs that save tax entitles tax deduction arrangement and are taxed as per the depositor’s tax slab. This does not pose a problem for someone who has a non-taxable income per annum. Hence, for the salaried people falling to the higher-income category, their returns after payment of tax would not go beyond the average rate of inflation during the tenure of the FD. 

Fixed Deposits are ideal for those who have a low-risk appetite and want to stay safe with their savings in the long run. Hence, to open an FD account, weigh your options according to the mentioned pros and cons and start earning proper returns without hassles.  çankaya travesti