Did you know that a high-interest Fixed Deposit (FD) is currently one of India’s popular fixed-income investment options?
This article will guide you through the factors to consider when choosing high-interest fixed deposit investment in India. Renowned banks and Non-Banking Financial Companies (NBFCs) offer fixed deposit schemes with competitive interest rates and strong credit ratings. If you are considering adding a fixed deposit to your portfolio, it is important to evaluate the interest rate, tenure, and issuer credibility before investing.
Why Choose a Fixed Deposit?
A fixed deposit is widely regarded as a relatively stable investment option. It offers predetermined returns if held until maturity and is not directly linked to market volatility. However, like all financial products, it carries issuer risk.
COVID-19 disrupted the world’s economic stability. Since then, there has been a dip in the investment market as investors have understood how market-dependent investments like Mutual Funds (MFs), Systematic Investment Plans (SIPs), and Stocks work during a crisis. Unlike market-linked instruments, fixed deposits are not directly impacted by stock market volatility. The interest rate remains fixed during the tenure once booked. This is the benefit you should consider before investing in a high-interest fixed deposit.
High-Interest Fixed Deposit might sound like an investment option for the future, but it is here now and delivering competitive returns to the investors.
5 Important Tips to Consider Before Investing in High-Interest Fixed Deposit
When you choose a high-interest fixed deposit in India, below are a few factors you can consider:
Reliability Comparison
When making an FD investment, your number one priority must be reliability. Especially when you choose a high-interest fixed deposit, you should be very cautious. Hence, do your research and compare the reliability standards of the financial institution you are choosing.
In recent years, NBFCs have improved their ratings to help traditional, and new-age investors invest confidently. Shriram Unnati Fixed Deposit is accredited with “Crisil AA+/Watch Positive” by Crisil Ratings Limited, "[ICRA]AA+ (Stable)" by ICRA and "IND AA+/Stable" by India Ratings and Research.
Fixed Deposit Amount
Banks and NBFCs have a minimum and maximum deposit limit. The deposit amount determines the maturity amount you receive and you have the freedom to invest any amount of money according to your convenience. However, you must know that the total interest earned depends on the investment amount, tenure selected, and applicable interest rate.
Flexibility in FD Tenure
Most financial institutions have a fixed tenure when you book a fixed deposit. Lately, banks and NBFCs provide tenure options ranging from 12-60 months* and you can choose the tenure basis your convenience.
Diversify Your FD Investment
“Don’t depend for your success on a single plan”. As this quote says, you should never depend on good returns with a single fixed deposit account. It would be best if you knew the art of diversifying your FD investment to earn better and high returns.
Some FD issuers provide both cumulative and non-cumulative FD options. You can diversify your funds, make a deposit in both cumulative and non-cumulative fixed deposits for different FD tenures and earn payout regularly and at maturity. Diversifying your FD will benefit you to structure your investments efficiently and manage liquidity and income requirements more effectively.
Also Read: Everything you need to know about a Long-term Fixed Deposit
Invest with Shriram Fixed Deposit
If you are exploring interest fixed deposit options, you may consider reviewing Shriram Fixed Deposit schemes. Shriram Finance offers competitive interest rates along with strong credit ratings. As with any investment, it is advisable to evaluate the terms, tenure, and suitability before investing.
FAQs
What is the best way to invest money in an FD?
Diversifying your investment money into a few or at least two fixed deposit accounts is a great way to invest money in an FD. Shriram Finance offers cumulative and non-cumulative fixed deposit accounts to help you earn at maturity and regular intervals.
Which type of FD is best?
A cumulative fixed deposit may be suitable for investors seeking long-term accumulation. If you prefer regular payouts, a non-cumulative fixed deposit may be more appropriate.
Which interest rate is the most reliable for an FD?
The reliability of a fixed deposit depends primarily on the financial strength and credit rating of the issuer rather than the interest rate alone. Investors should review the institution’s credibility and terms before investing.