In order to have a secure and safe financial future, it is essential to start investing your hard-earned money at an early stage. This not only helps one to grow wealth exponentially but also keeps your finances secure.
In India, fixed deposits are considered one of the safes investment instruments as they are typically backed by the government or the bank itself. Moreover, potential investors are more inclined to invest in it due to assured returns as fd interest rate is stable throught the tenure.
What is a fixed deposit?
Also known as term deposit, it is a type of investment scheme offered by banks or financial institutions that allows one to deposit money for a fixed period and earn interest.
The interest rate here is usually higher than the rate of interest offered on a savings account, as the bank has access to funds for a fixed time. Therefore, the longer the fixed period, the higher the interest rate is likely to be.
How does it work?
- Potential investor deposits a certain amount of money with the bank/financial institution for a specific period of time. This time period typically ranges from a few months to several years.
- Further, the bank/financial institution pays a fixed rate of interest on the deposited amount for the duration of the investment.
- When the investment period ends, the investor can either withdraw the money or reinvest it for another term.
What are its pros?
FDs are considered to be a safe investment as it is backed by the government or the bank itself. Moreover, the fd interest rate is fixed for the duration of the deposit.
● Assured returns
This is one of the major pros of investing in a fixed deposit. It helps you earn a fixed and assured rate of interest for the entire tenure.
These investments are liquid in nature. This means one can easily withdraw the money before the maturity date.
How long should you invest in Fixed Deposits for Maximum Profit?
It totally depends on you! The total duration an investor should invest in an FD to maximize the Profit depends on their investment goals and risk tolerance. Keep in mind the longer the term, the more the Profit.
However, as an investor, if you have a short-term goal in mind, consider a short-term fixed deposit with a term of just six months or a year. On the other hand, if you plan for the long run and calculate FD interest accordingly, consider investing for two to five years. This ultimately will earn you a higher interest rate and maximum your returns.
How to invest in a fixed deposit?
Nowadays, investing in fixed deposits is as easy as ordering food from your smartphone. You need an internet connection and the right app. Around three months ago, when I was planning to invest in the same, one of my colleagues told me about the Bajaj Finserv application. Believe me, it is super easy to use.
- Download the app from Play Store/App Store
- Sign up by entering your mobile number
- On the home page, you’ll see the Investment Bazaar section
- Tap on Fixed Deposit
- Proceed further as per your suitability/requirements
(Tip: Use a fd interest rate calculator before investing.)