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Making The Most Of Your Fixed Deposit
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Fixed deposits are believed to be the simplest and safest form of investment available for an investor. One of the biggest deductions which banks conduct on an investor’s interest earned is TDS. If the interest an individual earns is higher than ten thousand in a single financial year, the bank will be required to deduct ten percent of the interest earned. This is a huge blow to the amount of interest you could have received. However, since most financial institutions follow their own procedures and deduct the TDS at different times, one can take steps to avoid paying TDS. The first thing an individual can do is space out their fixed deposits. When you are opening a new deposit, the financial institution provides the investor with details about the interest earned at the end of the tenure. What an investor can do is space out their deposits so that the tenure of each ends in different periods of time so in no particular year does the interest earned exceed ten thousand rupees.
Fixed deposits are the perfect way for an individual to increase their savings. One can simply opt for a tax saving fixed deposit to improve their savings. Such a deposit requires the individual to put in a fixed amount of money for a minimum of 5 years. During this period one cannot withdraw money from the deposit. The interest rate offered for such a deposit is higher making it an ideal investment option.
A fixed deposit can be used for a variety of purposes besides simply earning a high interest. The other two ways in which one can make the most of their fixed deposit are:
It is extremely important for every individual to have their own emergency fund. This fund can usually used in unforeseen circumstances especially for medical emergencies. One can never predict when they may get into an accident or contract a serious disease. In such cases have an emergency fund would make affording medical treatment a simpler and less stress option.
When applying for any type of a loan, it is extremely important for the borrower to plan how to repay the loan. Most financial institutions require the borrower to repay the loan in monthly EMIs. Any defaults on the payment can force the bank to serious action. Hence one can simply start a fixed deposit to help in periods where the borrower cannot afford the EMI.
One can use their fixed deposits for a variety of purposes. It is a safe investment which guarantees high returns.
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 deposits and how to make the right investment choice.
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