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Fixed Deposit: Top 5 Reasons To Open A Fixed Deposit Now
"For most people, when it comes to safe investment avenues, a fixed deposit is one of the most popular investment options. Many senior citizens and retirees open fixed deposits to ensure a regular inflow of cash from their retirement monies.
A fixed deposit is a type of deposit where the funds are locked in for a particular period. The fixed deposit interest rates vary on the basis of the period of the deposit. The bank regularly revises FD interest rates depending on economic conditions. The rate of interest on FDs is not as high as other investments, but it has certain benefits, which make it an attractive investment alternative.
Here are the top 5 reasons to open a fixed deposit now:
Opening a fixed deposit is no more a tedious procedure which requires you to visit the bank physically. Using net banking, you can open a fixed deposit of your desired duration in a matter of minutes. FDs can also be opened using mobile banking.
It is not only convenient to open a fixed deposit, but it is also equally simple to liquidate a fixed deposit. Both net banking and mobile banking allow a customer to settle a fixed deposit.
2. Tax saving:
Investment in 5-year tax saving fixed deposits gets a deduction up to Rs. 1,50,000, under Section 80C of the Income Tax Act, 1961. However, you need to pay tax on the interest earned from such a fixed deposit.
The interest on fixed deposits attracts TDS, however, banks will not deduct TDS unless it crosses Rs. 10,000. This provides relief to small investors.
3. Insurance up to Rs. 1 lakh:
Fixed deposits are generally safe investments. However, each fixed deposit is usually insured up to Rs. 1 lakh by the DICGC (Deposit Insurance Credit Guarantee Corporation of India). To take the maximum benefit of this provision, you can split up your deposits to ensure they get covered by this protection.
4. Flexible investments:
Fixed deposits are flexible investments in the sense the minimum amount to invest is Rs. 500 but there is no cap on the maximum amount. This makes it possible for a person to open small fixed deposits with their savings.
5. Senior citizen concessions:
Senior citizens get special concessions when they open fixed deposits. Generally, senior citizens get higher FD rates as compared to other depositors. Also, under Section 80TTB of the Income Tax Act, savings and fixed deposit interest up to Rs. 50,000 is deductible from the total income of the senior citizen. This gives them higher income.
Author Bio:- Neha Sharma is a finance student who loves to write in her free time. She has spent considerable time researching about fixed deposit. Through her work, she has given reasons why one should get an FD
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