What is Fixed Deposit ?
What is Fixed Deposit meaning
fixed deposit is about it in detail which is the easy and safe way of investing.
Fixed deposit
- information,
- advantages and
- disadvantages.
👉How to think on fixed deposits Income tax
👉how to count interest or interest on FD.
👉Who should get an FD
and if you're thinking of taking a mutual fund, SIP or making a fixed deposit,
This post will try to explain to you where it's okay to invest. Benefits of Fixed Deposit and rules.
Fixed Deposit easy and safe way to invest fixed deposits
Fixed Deposit
- Fixed deposit is a fixed deposit at a fixed rate of interest
- Get it done in a bank, post office or a NBFC
- Fixed deposits get more interest than savings account
- Can also open online
Fixed Deposit meaning
Fixed Deposit or FD, FD is also known as term deposit or time deposit.
it is also known as fixed deposit or term deposit.
Fixed means fixed, stable or permanent and deposit means deposit.
In simple terms, deposits made for a certain period of time at a fixed interest rate are called Fixed Deposit.
Fixed Deposit you can get it done in a bank, post office or a NBFC.
Some companies also accept Fixed Deposit. Most people prefer to make fixed deposits in banks or post offices.
Fixed Deposit get better interest
Usually, the FD gets more interest than the savings account. Before getting an FD, find out how the interest will be added to the Fixed Deposit account.
Some banks add interest on an annual basis and some banks add interest to the account on a quarterly basis. The longer the FD is made, the more interest rate usually increases.
You can also break the Fixed Deposit
In such cases, interest is paid at the rate applicable at the time of return, if you break the Fixed Deposit before maturity, it is known as premature withdrawal.
For example,
if an FD is made at 8% for 5 years, but after 2 years it has been broken. If the rate applicable on the date of deposit for 2 years is 5 percent then the interest will be paid at 5 percent. Banks may also impose some penalties for premature withdrawals.
Interest rate on Fixed Deposit
The interest rate on fixed deposits may vary from bank to bank but generally there is not much difference. The interest rate on Fixed Deposit is higher than that of a simple savings account. This rate can range from 4% to 8% over the time period of Fixed Deposit. Some banks also pay some more interest on large deposits.
Types of Fixed Deposits
- Normal Fixed Deposits
- Tax Saving Fixed Deposit
- Senior Citizens Fixed Deposit
- Cumulative Fixed Deposit
- Non Cumulative Fixed Deposit
- Flexi Fixed Deposit
1.Normal Fixed Deposits
It deposits the money in the bank for a certain period of time and gets more interest from the savings account.
2.Tax Saving Fixed Deposit
It has a period of five years and a deposit of up to 1,50,000 ₹ is exempted under 80c.
3.Senior Citizens Fixed Deposit
The scheme is meant for senior citizens i.e. The scheme provides higher interest than other Fixed Deposit schemes.
4.Cumulative Fixed Deposit
The interest in this scheme is added to the principal on a quarterly, half yearly or
annual basis and is available on maturity.
5.Non Cumulative Fixed Deposit
The interest in the scheme is paid on monthly, quarterly, half yearly or annual basis so that the account holder's day-to-day expenses can be worked out.
6.Flexi Fixed Deposit
The scheme is linked to savings account. When the balance of the savings account reaches a specified sum, it is converted into a Fixed Deposit. The amount of Fixed Deposit is also returned to the savings account as and when required by the same purpose.
7.Options to open Options for Fixed Deposit
There are many options to open Fixed Deposit, prominent among which are:
- Bank Fixed Deposit
- Post Office Fixed Deposit
- NBFC Fixed Deposit
- Corporate Fixed Deposits
Advantages of Fixed deposit
Benefits of Fixed Deposits
Fixed Deposit or FD is one of the most popular savings instruments available in the country. People prefer to invest in FDs because of flexibility and liquidity. This is an easy and safe way of investing.
Your investment is secure and maturity value means the maturity amount is predetermined and guaranteed. You can withdraw money by trampling it whenever needed.
Usually Fixed Deposit get more interest than the savings account. Some banks also give you loans or credit cards at easy interest rates instead of Fixed Deposit.
Fixed deposits are one of the most popular financial products and there are many reasons for this. Here are some of the major benefits of term deposits that we will discuss in detail:
- Guarenteed Return
- Flexibility in Flexibility tenure
- High Interest
- Compounded Interest
- Regular Income regular income
- easy to open Easy to Open
- Easy to close Easy to Close
- Best for Senior Citizones
- Loan Facility Loan Facility
- Savings on Tax
1.Guarenteed Return
There is a guarantee of return on investment. In addition to the amount deposited in the FD, you will get interest at the prevailing interest rate at the time of deposit. Market fluctuations or interest rate reduction scarcity will not affect returns on your investment. That is why most experienced investors also prefer to keep a part of their investment in term deposits.
2.Flexibility in Flexibility tenure
Tenure for fixed deposits can be very flexible which ranges from 7 days to 10 years depending on the customer's needs. You can deposit multiple terms in the same bank for the same or different term at the same time. You will receive a separate receipt for each FD.
3.High Interest
The rate of interest on fixed deposits is much higher than that of a savings account. Interest rates vary depending on the duration of fixed deposits. Most long term FDs have a higher interest rate.
4.Compounded Interest
Customers can select the frequency of the interest they want to receive, whether on a monthly, quarterly or annual basis. It will become another source of income for the customer. Interest on fixed deposits is counted as compound.
5.Regular Income
Interest on Fixed Deposit becomes a regular and safe source of income. You invest your savings on earnings. You can get income regularly without doing anything.
6.Easy to Open
You can easily open a fixed deposit by going to the bank where you have an account. You can also open it with mobile banking sitting at home. By taking money from your bank account, the bank makes your Fixed Deposit.
7.Easy to close
If the Fixed Deposit automatically closes after the stipulated time and the money is added to your account with interest, you can easily close it prematurely if you want. Premature crushing of it may reduce the interest.
8.Best for Senior Citizones
Fixed deposits are very popular among senior citizens. The first reason for this is easy to build, there is no risk and the senior citizen gets a higher interest rate which can be 0.5% to 1% higher than the interest that ordinary people get. Senior citizens also get additional tax exemption on interest.
9.Loan Facility
It is easy to take a loan on the basis of your fixed deposit if you need money in an emergency. Customers can also take a credit card or overdraft in return. The customer can borrow up to 90% of the principal amount of fixed deposit. The customer also gets interest on taking a loan against the FD. The customer has to pay interest on the loan taken which will be slightly lower than the market rates.
10.Savings on Tax
Tax exemption is available under Section 80 C of Income Tax on Fixed Deposit of five years. The interest you earn from tax-saving FDs will be taxable. TDS is not deducted if there is less than ₹40,000 interest in a year, but the interest income on it has to be credited to your taxable income.
Disadvantages of Fixed Deposit
If the rate of interest is higher than the rate of inflation, there is a real profit in investment. If the interest rate on FDs is less than inflation, the purchasing capacity of the amount you actually get at the time of maturity may be less than the amount invested. NBFC may have a higher rate of interest than the bank.
- There are damages on Fixed deposit
- Low Interest
- Better investment options available
- income tax
- Low Interest
Although Fixed Deposit fetch more interest than a savings account, this interest is sometimes lower than the rate of inflation, which makes the actual income very low or non-existent.
Better investment options available
Although your money is safe in Fixed Deposit, you can get better returns in mutual funds, stock markets and real estate if you are willing to take risks.
income tax
The interest you earn from tax-saving FDs will be taxable. Interest on all types of Fixed Deposit is added to your taxable income. Your bank can deduct TDS on interest paid on all your fixed deposits.
Take a mutual fund or get Fixed Deposit
Where to invest Mutual Funds or FD now tell you to take a mutual fund or get an FD. If you're investing over a long period i.e. more than five years and are willing to take risks on your investment, you can invest in mutual funds by SIP. Mutual funds can give you higher returns than FDs, but they also have risks.
If you are investing for less than five years and want to invest risk free, you should get Fixed Deposit.
Hi , This is Pramod Choudhary from Nagaur Rajasthan India. I an student and I would like to share my positive thinking with everyone that's my passion . Thank you
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