6 Best Ways to Pick the Right Fixed Deposit
With proper financial planning, you can use a Fixed Deposit (FD) to achieve both short-term and long-term goals. A fixed deposit is a good investment options because it offers reliable returns. These features and benefits make the fixed deposit an attractive investment option to all sorts of investors.
Defining a Fixed Deposit
A fixed deposit is a practical investment that allows you to save your hard-earned money and get predictable returns. To invest in an FD, you must have a lump sum of money to set aside for a fixed tenure to get returns. Once the tenure of the fixed deposit is complete, you will earn interest on the maturity amount. You can open a fixed deposit at any bank or Non-Banking Financial Company (NBFC) of your choice, you can maximise your savings quickly. A fixed deposit can be opened via a simple online process on Shriram website. Shriram FD calculator will help you determine the amount of interest you get on a fixed deposit. Many financial institutions offer different fixed deposit plans. Cumulative and non-cumulative fixed deposits are the most popular type of plans in a fixed deposit. Let's explore the top 6 ways to pick the right fixed deposit:
1. Rate of Interest
The interest rate on an FD is decided according to the tenure you select. A person over the age of 60 years is eligible to get extra interest on their fixed deposit as they qualify as a senior citizen. The interest rate on an FD also depends on the financial institution you choose. Shriram offers an 8.15%* p.a. interest rate on a fixed deposit, including the additional 0.50%* p.a. interest rate for senior citizens and 0.05%* p.a. for Women Depositors.
2. Tenure
Selecting a tenure for your FD is important as it is directly related to the interest you can earn. A fixed deposit has a flexible term that allows you to plan your financial goals efficiently. Short-term and long-term goals can be achieved by selecting an appropriate tenure for your deposit.
Depending on the financial institution, an FD tenure can range between 12 months and 5 years. Use the Shriram FD calculator to determine the amount of interest you can get for a specific tenure.
3. Withdrawal Rules
It is advisable to know all about the rules and regulations of FD withdrawal. This information can be useful in cases of emergencies when you need to withdraw or break your fixed deposit. Most financial institutions charge a penalty for premature withdrawal of a fixed deposit. Some banks and NBFCs may waive the penalty if the depositor can prove the premature withdrawal was made for an emergency.
4. Credibility of the Institution
FDs are rated by credit agencies such as CRISIL, ICRA, CARE, and India Ratings & Research based on multiple financial parameters.
These ratings can help investors assess the creditworthiness of the issuing institution. It is always advisable to review the background and credit rating of a bank or NBFC before opening an FD.
5. Choose Between a Cumulative and a Non-Cumulative FD
A fixed deposit is divided into two main categories based on the payout frequency. A cumulative deposit can help you earn a higher interest rate, but you will receive the payout upon maturity of the FD. A non-cumulative deposit allows the investor to get a regular interest payout. The payout frequency can be received either monthly, quarterly, half-yearly or yearly.
A cumulative deposit is most advisable for an investor saving for a specific financial goal or long-term investment and looking to grow their finances. A non-cumulative deposit is for investors with minor financial needs, as the regular interest payout will meet those needs and earn benefits on the principal amount.
6. Loan Against FD
The loan on the FD facility is significant as it can help in emergencies when one needs money at short notice. Instead of liquidating or breaking a fixed deposit, you can apply to take a loan against FD. This way, you can continue to earn interest on your FD while it is being used as collateral for a loan. Typically, one can only claim 75% of the loan amount against your FD.
Every financial institution will have terms and conditions for the loan against an FD.
How Should You Select the Right Fixed Deposit?
Getting the most competitive interest rate for your investment must be one of the most critical factors. The tenure, credibility, types and features of a fixed deposit are the other factors to consider to decide on a fixed deposit that suits your requirements.
Invest in a Shriram Fixed Deposit to get interest rates of up to 8.15%* p.a., inclusive of the additional interest of 0.50%* p.a. for senior citizens and 0.05%* p.a. for Women Depositors. A Shriram FD will help you develop a healthy savings habit. You can also be flexible in selecting the tenure and the interest payout on your fixed deposit.
Key Highlights:
With a credible financial institution, you can get reliable returns with a secure investment.
An FD offers a better interest rate than a regular savings account.
Invest in a Shriram Fixed Deposit to get interest rates of up to 8.15%* p.a., including the additional interest of 0.50%* p.a. for senior citizens and 0.05%* p.a. for Women Depositors.
FAQs
1. How do I choose the best-fixed deposit plan?
You can choose a fixed deposit scheme by considering factors such as interest rate, tenure, withdrawal rules, payout option, and the credibility of the financial institution.
2. Which FD gives the most competitive returns?
A cumulative fixed deposit may result in a higher maturity value because the interest earned is reinvested until maturity. However, the interest payout is received only at the end of the tenure.
3. Which scheme in FD gives the most competitive rate of interest?
The interest rate depends on the tenure of the investment and the financial institution you choose. With a Shriram FD, you can get interest rates of up to 8.15%* p.a.