When planning to make an investment with a lower risk factor and thinking about how to invest surplus fund , evaluate your options using these three criteria:
Fixed Deposits (FD): FDs (Fixed Deposits) are the most popular investment option in India. Why? It is easier to avail, has fixed interest rate, and an assured maturity sum which remains unaffected by market fluctuations.
The interest rate may differ depending on the lender. NBFCs offer a higher interest rate as compared to Banks.
A stellar portfolio is one which is diverse, balanced, and profitable. For earning individuals, saving and investing both are vital to ensure that their finances are always in the pink of health. Saving is simpler than investing as there are not too many factors to consider here, but in case of investing, things can get a little challenging when the investor is not seasoned and is ignorant. To make things simpler and better for all investors who need a slight nudge in the right direction, given below are a few smart moves that will help them build the best investment portfolio:
Mutual Fund Investments
Mutual funds are market dependent investment options that provide significant returns when the money is placed in the right funds. The returns from mutual funds are subject to the performance of the market security under current market conditions. As a result, there is no concept of assured returns, but instead, there are indicative returns. They are mostly considered long term investments as the losses get averaged out against the gains.
Investing in Fixed Deposits
Fixed deposits (FDs) are market-proof investment objects that can provide returns of the range of 8% per annum depending on the tenure of investment and the financial institution chosen.
Banks and Non-Banking Financial Companies (NBFCs) provide FDs with cumulative and non-cumulative interest payout options and renewal of the same. Some institutions also allow loans against FDs. So if you want to invest money in fd then you need to know pros and cons about fixed deposit investment.
FDs are safest kind of investments but there are certain rules attached to it which many do not know. As an investor you must have knowledge about these rules before you invested.
Most of the rules are enclosing points about TDS and its effect on the interest that you earn on your investments. Also, the interest that you earn is taxable after a certain limit.
Let us Find out More About These Rules which help us to avoid to pay tax on FD–
You can save on TDS by filling in Form 15G or 15H, So before investing you must follow this above mention rules for fixed deposit.
Investment decisions made without prior thought, consideration and research can prove to be detrimental for one’s financial health. For most investors, the two aspects of investments that take maximum of their attention include the risk and returns. The right balance between these two factors is found in case of PPFs, FDs, and even mutual funds.
Fixed Deposits are financial instruments offered by banks and NBFCs wherein the investor deposits funds for a particular tenure to earn returns. PPFs require the investor to deposit money for up to a particular time and gain returns when the term of deposit ends. Mutual Fund Investment are made on company stocks and shares and the earnings are based on the performance of the company in the stock exchange.
Here, we are comparing the key aspects of all the three investment options named above:
Both PPFs and FDs are tenure bound- this means that the amount invested and the returns from them are received at maturity. Mutual funds do not have a lock-in period and the funds can be accessed at any stage of the investment.
Safety of Returns
Returns from FDs and PPFs are independent of market fluctuations, which means that unless there is any economic policy issued by the Reserve Bank of India, their returns are unchanging. Returns from mutual funds are subject to market conditions and the actual returns can vary significantly from the indicated returns.
Tips to know Which is Better Saving Account or FD or Mutual Fund
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.