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Fixed Deposits – A Safe Investment To Bank Upon
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A Fixed Deposit is a smart way of multiplying your money. It’s like a savings account with a higher rate of interest on return. The rate of interest differs with various factors such as the bank you are dealing with, the tenure of the deposit, the amount of deposit, the type of fixed deposit you choose etc.
The main purpose of a fixed deposit is that the investor gets a higher return than he gets in a savings account. Although, you should remember that in a fixed deposit you can only deposit the amount once and at the time of investment you are given a slip. This slip is important because when your amount matures, you need to present it to the authorities to collect your return.
For various reasons, fixed deposits are a secure investment. Those reasons are as follows:
Unlike other investment options such as real estate, purchasing shares or opening a savings account in a bank, opening a fixed deposit account comes with guaranteed return. One of the biggest advantages of opening a fixed deposit account in a bank is that you will get a 100% return on your investment or surplus money. Moreover, the rate of interest on your deposited amount is also higher when compared to your savings account. Thus, there is no loss of money at your end.
In a fixed deposit investment, you are the supreme authority. You decide the amount you want to deposit and the tenure of your deposit. Also, the interest can be collected annually, monthly or at maturity. Thus, you control the cards in this investment. On comparison, purchasing shares in a company or buying a new property is a complicated process and there are various factors involved that you can’t control.
One of the most advantageous features of this type of investment is that you can withdraw your principal amount at any moment. So in case of a medical or a financial emergency, when you are in need of urgent finance; you can liquefy this asset without losing anything. Although, you do lose out on interest but that amount is negligible in comparison to selling property or stocks or shares at the last moment.
In accordance to the rule passed by the Income tax department, any investments in a fixed deposit amount up to Rupees One Lakh is eligible for tax deduction. This income tax act under section action 80 C has made fixed deposits extremely popular amongst salaried individuals.
However, in case of real estate investment one has to pay a huge sum of tax on the property that’s being purchased.
Author Bio :
An experienced writer on finance topics, the author articulates of investment choices such as fixed deposit products in India & recurring deposit schemes. She writes about a variety of topics including the benefits of recurring & fixed deposit and how to make the right investment choice.
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