A fixed deposit is an exceptional way of meeting your money goals. But, what if there is an emergency? You can break the fixed deposit or take a loan against your FD to meet your urgent money needs. A premature withdrawal from the FD is equivalent to breaking a business agreement and will have its consequences. You will have to deal with a reduced interest income payout coupled with a penalty charge. So, breaking an FD is usually not advisable.
See if you can get an overdraft facility against the FD - you will be charged interest only on the amount utilised and only for the number of days the money has been utilised. Your fixed deposit will work as security and will make it easier for you to obtain a loan. At leading corporates, you can obtain up to 75% of the deposit amount as a loan.
Implement the ladder strategy
The ladder strategy is easy and can be personalised to meet your requirements. To create a ladder means to open different fixed deposit accounts with varying maturity. Let's understand how such a strategy can help.
Say you have Rs.1,00,000 to invest in FDs. Instead of investing the entire amount in a single fixed deposit, having a particular maturity period, consider having five different FD accounts. You can invest Rs.20,000 each in FDs maturing in 1,2,3,4 and 5 years. This way, if you have a drastic cash requirement at the end of the 1st year, you can use the money generated from the first fixed deposit. However, if it turns out that there is no significant money needed at the end of the first year, then the maturity amount can be reinvested in another FD. Such a strategy will help you balance out the interest income as well.
Shriram Finance provides fixed deposit facilities that meet all the requirements mentioned above. The fixed deposit tenures are flexible, and you can select a duration suitable for you. The interest rates are competitive with a 'MAA+/ with Stable Outlook' rating given by ICRA.
There are so many institutions providing fixed deposit facilities these days. Therefore, it becomes all the more essential to research appropriately and conduct a thorough background check of the corporate.
A corporate fixed deposit is an ideal blend of high returns and low risks, making it highly attractive to income earners. Follow the pointers mentioned above while looking for an FD facility.