Security: If the market fluctuates, a certificate of deposit will not consume your capital. Similar to traditional insurance policies, it provides a guarantee amount at maturity. If you invest in a certificate of deposit, you will be guarantee a predictable return on your money. In terms of short and mid-term investments, this is a very safe investment. They may not have enough liquidity to deal with any urgent financial needs during those times. The number of risk factors it should consider before investing in these plans is of utmost importance for investors to consider their financial goals, liquidity preferences, and risk tolerance. High Rate of interest: It is undeniable that this benefit is some of the factors that attract the majority of investors to certificate of deposit accounts. It is noteworthy that these accounts, as oppose to traditional savings accounts, offer you higher rates of interest that can reach as high as 7.8% on the lump sum deposit as oppose to traditional savings accounts that average around 4%. A Certificate of Deposit (CD) refers to a fixed-income financial instrument govern by the Reserve Bank of India. When it comes to payouts, they are all guaranteed from the very beginning. There are a large number of financial institutions that are capable of issuance of certificate of deposit in India. Flexibility: It is possible to withdraw money from a certificate of deposit at maturity in several ways, including monthly payments, annual payments, and lump sum withdrawals. The bank must meet specific parameters before investing, but you are also free to choose the duration and price of that investment. A CD can be customize to meet your needs to get the most out of it. It is also important to note that many investors must pay a withdrawal fee if they want to withdraw their cash before the maturation date. Maintenance is low to minimal: There will always be brokerage fees associate with the conveyance, buying, and selling of shares in the market, as there will always be brokerage fees relate to the transaction. Most of the time, CDs do not have any additional costs. It depends on how much money you invest in a particular bank. There is a possibility of offering discounts on the face value of these certificates.
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About Author:Aman is working in the domain of Investment management in one of the top universities. He has published research papers and case studies in Investment and Fixed Deposit marketplace. He is an avid blogger in the domain of Investment management. you can also find him on social networking platforms. Archives
August 2022
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