What it means by "Fixed Deposit - FD"?
Fixed Deposit (FD) is a great investment option wherein you invest amount as per your financial goals for fixed tenure and with fixed interest rate. Once your tenure finishes, you will get your investment back with interest earned over it. In our country, FD is most popular investment option as it is safe and offers good returns.
Important Points about Fixed Deposits
Term
As per the account holder’s investment goals, fixed deposit term can be opted from 7 days to 10 years.
Interest Rate
Based on the deposit amount and term length, many companies offer interest rated ranging from 6.50 % to 9.50 %
Minimum and Maximum Limit
No such minimum and maximum investment limit is set by rules over fixed deposit, still many banks and NBFCs allow investment amount from 100 Rs. to 1.5 Lacs.
Withdrawal
If for any reason investor needs to withdrawn his FD, it is allowed with additional penalty or fine over the withdrawn.
Taxability and Tax Benefits
Banks deduct the TDS at their end as interest earned on FD is taxable income. Also account holder can claim tax benefits under section 80C of the Income Tax Act, 1961.
Loan Facility
Many of the banks and NBFCs offer loans against the FD.Features of Fixed Deposits
If you are not risk appetite person, then FD is best investment option for you. If you are looking for guaranteed returns, FD is best solution. In case of market-led investments, returns fluctuate time to time whereas in case of FD returns are fix and guaranteed when you open the account.
It is very easy to open fixed deposit account. You can easily transfer your investment directly from your saving account to FD without any additional documents and paper work. Using online mediums, now it is also possible to open FD directly from home.
As the name suggest, interest rate remains fixed throughout your fixed deposit term. If interest rates decreases after you open FD, your return will be calculated based on the interest rate at the time of opening a FD.
