A Fixed Deposit (FD) is considered a relatively stable investment option, but there are many things that you should keep in mind before booking a fixed deposit account. The interest rate and tenure of the deposit are some of the top factors to keep in check.
The features of a fixed deposit will enable you to invest efficiently and earn better returns over time. Let us look at 6 important things you should know before opening an FD:
Deposit Amount
The deposit amount differs across financial institutions. Some offer a lower deposit amount, allowing everyone to invest in a fixed deposit. You can open an FD with an investment amount as low as ₹5000 with Shriram Finance.
Usually, there is no maximum deposit amount, but it is essential to check the financial institution’s guidelines. The more money you invest in a deposit, the more interest you can earn on it.
Tenure
A fixed deposit interest rate depends on the tenure of the deposit. Once the term is chosen, the interest rate also gets locked in till the day of maturity. Individuals can select any tenure that suits their requirements for investing in a fixed deposit. The term of the FD will vary according to the financial institution of your choice. Planning your financial goals becomes easy with the flexibility of an FD tenure.
FD Rates and Payouts
The interest rate on a fixed deposit is decided according to tenure and may vary among financial institutions.
The payout of a fixed deposit depends on the type of fixed deposit you select. You can either invest in a cumulative or a non-cumulative deposit. With a cumulative FD, an investor can earn more interest as it helps with compounding. A non-cumulative deposit allows you to get the interest as a regular payout which can be received monthly, quarterly, half-yearly, or yearly.
Premature Withdrawals
Withdrawing a fixed deposit before its maturity is possible. You will be charged a penalty fee for a premature withdrawal.
Nomination Facility
In the case of the sudden demise of the account holder, the nomination facility ensures that the control of the FD is handed over to a person trusted by the owner. The person assigned as a nominee to the FD generally acts as a custodian of the deposit.
Renewal or Withdrawal
Investors can renew or withdraw an FD based on what they opted for at the time of booking the FD. This facility makes it convenient for anyone as they won’t have to worry about deciding once the deposit is at maturity.
Conclusion
There are many factors to consider when opening a fixed deposit. Knowing what to check can help you make an informed decision and will help you get the most out of the fixed deposit. You will also be prepared for any situation by knowing the FD rules and guidelines.
Invest in Shriram Fixed Deposit today to benefit from competitive interest rates and flexible payout options. You can apply for a cumulative deposit to earn compounding benefits or a non-cumulative deposit if you need a regular interest payout.
FAQs
1. Is investing in an FD a good idea?
Yes, investing in a fixed deposit can help you develop a healthy savings habit and build a stable financial cushion.
2. What should I look for in a fixed deposit?
The interest rate, tenure, and reputation of the financial institution are some of the most important factors when opening an FD.