Sunday, 19 November 2017

How to Choose the Best Fixed Deposit?

Fixed deposits are one of the safest places to invest in. Investment options like shares, gold, and mutual funds involve risk. Though they have a higher interest rate to offer they involve high risk. Fixed deposits, on the other hand, involve less risk even though they offer you with higher returns. Returns on fixed deposits are comparatively more than the savings account.

Many people in India go for investing their surplus income in fixed deposits instead of saving it. You can invest funds coming from a business profit, salary appraisal or even from an old age pension. It’s better to invest in fixed deposit rather than going for saving them. Investing always benefits you with more returns as it replicates your fund.

Interest rates on fixed deposit are fixed and don’t keep on fluctuating. Fixed deposit interest rates are unlike the other investment interest rates which keep on changing. Other investment options depend upon the market conditions. As we all know market rates keep on fluctuating and one can also go in a loss if the market rates fall down. These investments are thus considered risky as they don’t have fixed interest rate even though they offer a higher rate of interest.

Banks Interest Rate on Fixed Deposit:

Now it’s important to know that different banks offer you different interest rates. Some banks may offer you high-interest rates whereas some may offer you with low-interest rates. You should always look for banks who offer you with high-interest rates if you wish to earn high returns on your fixed deposit investment.

 It’s also important to remember that banks offer you a rate of interest depending upon the amount you invest. If you invest a lump sum amount you might get greater returns over them and vice versa. But investing a higher amount may also lead you paying higher taxes. As banks charge taxes to the ones to whom they offer an interest rate above INR 10,000. You can check your returns with the help of FD calculator that will indicate you need to pay tax or not.

In such a case you can always split the amount and invest it in a different fixed deposit account. This will save you from taxation and also will help you earn higher returns. Banks also provide you interest rates depending upon your loan tenure. If you go for a long-term investment you would get higher interest rate whereas a short-term investment will give you fewer returns.

NBFCs Interest Rates on Fixed Deposits:

Not only banks but non-banking financial companies (NBFC) also offer you with fixed deposits. NBFCs provide you with a higher rate of interest as compared to banks. If you go for investing your funds in NBFCs fixed deposits you will be offered 2% more interest rate then banks fixed deposit. The RBI has agreed to offer 12 percent of the rate of interest by NBFCs to their investors in fixed deposits. Whereas normal banks offer 9 percent of interest rates to their fixed deposit investors.

Investing in an NBFCs fixed deposit can get you extra funds. But NBFCs have a little risk involved in them as they are not a bank and relying on them can get a bit difficult. It’s important to check the background and also the ratings of NBFCs as they can be fraud and you don’t want to lose all your hard earned money.

Now NBFCs offer you with two schemes when it comes to investments in fixed deposits. You can either choose for a fixed deposit which offers you interest on monthly bases or can go for a fixed deposit investment in which you get your interest with the principal on the quarterly year bases.

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