Saving is one of the biggest part of our Financial Planning. We are taught to save since our childhood days, as savings can be used for some emergency expenditures. Savings also encourage a sense of security knowing our immediate expenses can be covered. However, savings directly with a bank in form of an account or investing in FDS is all a matter of your requirements, A bank account is accessible, you can walk into the bank and withdraw your money at any point of the day. Additionally, if you require money immediately to meet any expense, say a doctor’s fee or your child’s education, you can make a payment using online payment methods, without a worry or hitch. The downside for this is that you know your money is accessible and you may use it to meet needs that are not so urgent or necessary. Interest rate is dependent on market forces.
FD investment for a locked in period. You will earn a pre-decided rate of interest on the amount you are investing, and market forces will have no role to play. Your bank or NBFC will clearly tell you the amount you will receive at the end of the tenure. In case of an emergency, you can either borrow money against the FD or pay the bank some penalty to break the FD. So, if you are looking for a long term saving gains, investing in an FD is definitely more advisable. Read more about why FDs make a better option for saving.
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We all know that investing in fixed deposit for a short period of time will give you more return whereas if you go for long-term investment, these interest rates are considerably low. So, what is the solution? How are we going to gain more from a fixed deposit? The answer is Non-Banking Financial Companies (NBFCs). This is because the interest rate is better in NBFCs. On the contrary, a unit trust investment company takes the money from the investors and then invests them optimally in shares of selected companies which are listed on stock exchanges around the world. Unit trusts (UT) do not come with a fixed term. Under UT, you can buy in and leave the time you want. FD even today remains to be one of the safest forms of investment. There are various factors like returns, fees, security and accessibility which need to be studied to understand the significance of a fixed deposit. For example: Under fixed deposits (FD) the returns are guaranteed and vary from 4-9%. There are various fees involved in fixed deposits such as withdrawal, deposits, etc. To know other factors in details about Fixed Deposit and Unit Trust. Read about FD Vs Equities: Which is better Fixed deposits are financial instruments that involve a safe investment for a desired tenure with the intention of earning profits at a fixed rate of interest. Most investors opt for FDs as they offer significant returns while giving them the liberty to choose the tenure and payout frequency for themselves. Bank Fixed Deposits Versus Company Fixed Deposits Investors can either opt for a bank FD or a company FD. Most people opt for bank FDs considering them to be the safer one among the two- in doing so, they end up missing out on better income opportunities as company FDs provide higher returns than those of banks. The challenge in finding the right FD scheme among so many companies is solved by the credit rating. This parameter is similar to the credit score of an individual- credit rating reflects the repayment capacity of an organization and is determined after thorough research of a company’s risk (financial and business) and management. Company FDs are more flexible and convenient when it comes to withdrawal of the deposited funds. Depositors can also avail a personal loans against their FDs if required. The interest payout can be monthly, quarterly, bi-annually and annually. Individuals belonging to varying income brackets can opt for company FDs.
With sufficient research on the credit rating, scheme details and application procedure, an investor can earn great returns from a secure company FD. Here we are going to find out how FDs are better than savings account and how can you put your money into work.
- Senior citizens are offered many benefits in FD - The interest rates applied are special keeping in mind their needs - These interest rates are higher than normal interest rates FDs can make you ready for the future - whether it is your life goals or future events, or emergencies. Therefore, check out FD now.
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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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