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Are You Aware Of The Hidden Advantages Of Fixed Deposit?
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Fixed deposit is an investment tool offered by financial institute or banks. Investors are offered high interest rates in comparison to other regular savings accounts. It is an investment that is carried out for a specific tenure and the fixed deposit interest rates are derived till the principle amount gets mature. Fixed deposits are considered as highly safe investments. One of the critical defining criteria for fixed deposits though is that the principle amount cannot be withdrawn before its maturity.
Here are some of the advantages of the fixed deposits:
1.Easy to invest:
The procedure that follows the creation of a fixed deposit account is very easy and simple. Moreover, it is a safe mode of investment that helps develop a habit of dedicated savings.
2.Returns are assured:
The most lucrative part of this investment is assured returns. The fixed deposit interest rate does not change with the fluctuations of the market conditions. The fd interest rates in India are generally over and above the returns offered by any regular savings account. The only factor that influences the returns is the tenure of the investment that is longer the tenure greater the interest rates.
People can opt for a time frame that suits them the best. There is an array of offers provided by banks regarding the tenure which usually range between 7 days to 10 years. Every bank has their own set of criteria and regulations. People do not need to have a bank for investment on fixed deposit.
4.Risk management instrument:
There are schemes that have higher return at the end of their respective tenures but they are volatile in nature. Therefore investment in debt instruments becomes necessary to adjust the market risks. Fixed deposits have proven to be the best risk managing planning instrument available in the market particularly for long-term financial investments.
5.Helps in liability crunch:
During a financial crisis people think they need to break the fixed deposit. However there is a way out where people can opt for a loan against their fixed deposit which ranges from 70%-90% of the principle amount. The bank do consider offering a higher loan amount but only against higher interest rates.
Fixed deposit interest rates are higher in comparison to other forms of investments. Apart from the fd interest rates, the other attraction is security and assured returns. Moreover, the fd interest rates never fluctuate according to the market condition so there is no fear of uncertainty about the fixed deposit rates.
An experienced writer on finance topics, the author articulates of investment choices such as fixed deposit products in India&recurring deposit schemes. He 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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