NBFCs offer multiple advantages in comparison to a bank FD, especially in the rate of interest. Fixed deposits are offered in two distinct versions, cumulative and non-cumulative. Each of them is different in how they pay out their FD interest rates. Cumulative fixed deposits compound the interest each year (or every quarter) and return it to the investor after maturity along with the principal. It is a great FD scheme for people who are looking forward to investing their wealth for a much greater return. These schemes are popularly known as money multiplier schemes because of their longer lock-on period, and cumulative addition of interest. Cumulative fixed deposits are ideal for young professionals who do not want access to a monthly fund right away. For instance, if you choose a cumulative scheme in an NBFC at 10% FD interest rates, you will not get anything every month, or year. However, after the tenure ends, that firm will pay you your principal amount with the accumulated interest. Suppose you have an FD of Rs. 1 Lakh, at the end of the first year, you will get back Rs. 1.10 lakhs.
In most schemes, cumulative fixed deposits are compounded quarterly. This interest is reinvested with the principal amount over the period of maturity. Generally, this period ranges anywhere from 6 months to 10 years. Companies like Bajaj Finserv offers a flexible tenor period of 12 to 60 months, and offer a market leading 8.75% FD interest rates. You can choose the best cumulative fixed deposit scheme with the help of an FD calculator, calculate the term period, principal amount, and choose the best return for your policies.
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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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