One of the easiest ways to get funding is through a loan against fixed deposit, which can be acquired even by people without a credit score.
How do Banks Provide Loans Against FDS?
A bank issues a loan against FD by considering the deposited amount as collateral. This loan is considered as an overdraft or demand loan. Therefore, it is given in the form of an overdraft.
The Interest Rate on Loans Against FD
The interest rate on this loan type is much less than a traditional loan interest rate. The interest rate charged on loan against FD is around 2-3%, whereas the interest rate on other loan types is around 6-8%.
Documents needed for Applying for a Loan Against FD
The banks require only FD receipt and loan application form for completing the loan procedure. Therefore, the application process is fast and hassle-free compared to any traditional loan.
Benefits of loan against FD:
Both Fixed Deposits (FD) as well as Savings Accounts are always safe and stable to save your surplus funds. But when it comes to the growth and flexibility it is ideal to go for FDs rather than savings accounts. Let’s see here about FD vs savings account.
Think about the benefits of FD vs savings account and invest wisely to see that your surplus grows.
Senior citizens mostly prefer Fixed Deposits to get a study income with high safety. It provides easy transactions and comes up with some additional benefits to senior citizens. Major benefits include high-interest rates and tax benefits. In addition, some of the basic benefits are –
Low risk: Fixed deposits are considered as the safest investment. They provide a promised interest and return at the time of maturity. This investment is not fluctuating or risky as mutual funds and other investment options.
High stability: Senior citizens get the best stability of the return and safety of the invested funds. Funds can be liquidated at the time of an emergency and enjoy a constant rise in the funds.
Attractive returns: People invest in FD to get a secured periodic return. This means that FD for senior citizens mostly pays off 50 paise more than the normal interest rate of FD. Thus, it provides more return for senior citizens.
Periodic interest payable: We all know that FD for senior citizens provides high-interest rates. Along with this, interest on the FD can be selected as a periodic payment or at the time of maturity. The investor can easily select this and open the FD online and offline.
In addition, senior citizens enjoy the tax on the interest earned. With all these benefits associated with the senior citizen FD, it is the best investment option to get a decent return at a certain period. Bajaj Finance provide best senior citizen FD option and see investment growing over time at a fast pace.
Fixed Deposit definitely provides a safe and high return on investment. There are various banks and non-bank financing corporations that provide the best FD options. All you need is to compare the interest rate, tenor, terms and conditions and feasibility to start the FD. These factors will help to find the right financial institute to invest with and enjoy the best return. Bajaj Finance is known for providing high-interest rate FD starting from Rs. 25,000. In order to have a fixed deposit, it is necessary to know the eligibility criteria.
What are the eligibility criteria’ for FD?
In order to invest in FD, an individual has to facilitate the right document and meet the eligibility criteria. Do you know who can open FD with Bajaj Finance? Here are certain criteria and it is necessary to meet any of them to successfully open FD –
Investments are crucial for financial growth which is beneficial in times of financial crisis. There are several types of investment options; each carrying its own pros and cons. Some investment avenues focus on fixed income whereas others are centered around capital growth. Some offer higher interest rates, but come with high risk (such as mutual funds); while others might be less risky but come with lesser interest rates.
Risks involved in investments
Every investment carries some level of risks such as economic, market fluctuations and
inflation. So when you choose one investment avenue with a high-interest rate, you can be in a
loss if the market fluctuation affects you.
How to safeguard yourself from the investment risks?
The best way to guard yourself against such investment risks is by diversifying your portfolio. Diversifying
means investing in more than one avenue, such that there is a perfect balance of risk and
For example, you can diversify your portfolio by investing in FD, mutual funds and, stocks. So if
the market rates go down, your mutual funds might be at risk but your FD is safe investment. If the market rates go up, your FD might not benefit a single penny; but your mutual fund and stocks will. Thus, you have achieved a perfect balance by investing in avenues that are less risky and offer high returns at the same time.
Portfolio diversification minimizes risks and maximizes returns. You can plan smartly on how to divide your capital in different avenues. In either case, you need to invest in FDs to safeguard your capital. Therefore, select a financial institution such as Bajaj Finserv; that offers high-interest rate, flexible tenures, and periodic interest payouts. Visit www.bajajfinserv.in to know more about the investment option.
There are many schemes that allow you to grow your finance; out of which some are risky and
others risk-free. Investment options like mutual funds offer a high rate of interest but are
subject to market fluctuations. Whereas investment avenues like fixed deposits offer a lower
rate of interest but are extremely safe.
FD is the best low-risk investment option for those who want stable returns with safety. There are various reasons which make FD one of the best investment options. Some of them are as follows:
1. Interest rates
FDs have high interest rates which give high returns. These interest rates are higher than the
You will get your money along with the interest amount at the end of maturity without any
3. Tax-savings benefits
Your money is also applicable for tax-benefits
4. Capital growth
Your money is subject to long-term growth of savings.
In case of an emergency, you can easily withdraw your money.
6. Regular interest income
You can earn regularly with fixed deposit.
One of the greatest advantages of fixed deposit is that it has flexible interest payouts.
These points make FD an excellent investment choice. Several non-banking financial institutions like Bajaj Finserv offer many FD schemes that allow you to watch your surplus grow. It has high interest rates and flexible tenures which enable you to grow your capital and smartly. Moreover, you can start investing with just Rs.25000! Visit www.bajajfinserv.in to know more about the FD schemes and offers.
The ROI from investment, in most cases, is subject to the condition of the stock market. For instance, interest gains from equities are subject to the stock market’s stability and hence, your investment in market-linked securities have high chances of depreciating as well. Therefore, there’s always a risk of losing money and thus, it’s always better to invest in safer schemes. The same goes without saying for people who lack the risk appetite and don’t have high returns expectations.
If you agree to what’s said above, below are some of the safest, non-market linked securities you can proceed with.
Also, Read Related Article: 6 investment options to protect you from a stock market crash
How To Evaluate Your Fixed Deposit Investment?
Fixed deposit is considered a smart investment as it offers substantial return in the time frame chosen by the investor. Why the investment is a safe bet is because it is rated high on safety and stability with ICRA’s MAAA (stable) rating and CRISIL’s FAAA/ stable rating so your investments are never at risk. Besides, being free from market fluctuations makes them a popular choice among investors who do not wish to take any risk.
To evaluate the maturity amount of your Fixed Deposit investment -
Also, Read This: HOW TO CHECK THE MATURITY AMOUNT OF BAJAJ FINANCE FIXED DEPOSITS?
EPF allows working professionals to contribute a portion of their salary every month to EPF. For most individuals it is a great way to save for their future or immediate needs. There is no doubt the EPF offers tax-free savings with easy liquidity options for the investor.
How EPF works?
Every employer generates a Universal Account Number of an UAN for its employees. This number does not change even if the employee switches jobs throughout their career.
Each month, the employer deposits a portion of the employee’s salary towards EDLIS or Employee Deposit Linked Insurance Scheme, and a part towards the administrative charges. While, the remaining portion is contributed to the employee’s PF account. This process is entirely managed by EPFO.
Employees, as per the government rule can break their Provident Fund (PF) savings at the time of maturity of the deposit or when they retire or at a premature duration for personal reasons.
For government employees EPF is entirely exempted from tax. While, one can claim tax deduction up to Rs. 1 lakh. The current interest rate on EPF stands at 8.55% as provided by the government.
So, coming back to the question is EPF enough as a retirement corpus. This is a subjective choice. But, I suggest investing some money in low-risk, tax-saving schemes as well. For instance, Fixed Deposit they also help to earn higher interest income and accumulate wealth to manage all kinds of financial obligations. Being free of market fluctuations they offer a secure investment tool and helps to diversify your portfolio.
Also, Read Relate Article: HOW DOES A PROVIDENT FUND WORK?
Investing in bank FD was the best and the most obvious choice for people around a few decades ago. But today, owing to the ever-increasing number of banks and NBFCs competing with each other, bank FDs no longer remain a fruitful option. With the banking institutions still offering somewhere between 6% p.a to 7.25% p.a; corporate Fixed Deposit seem like a more conducive alternative.
Having said that, with an increased rate of interest increases the risk of the principal amount and hence, gauging the credibility becomes inevitably essential. That said, a much more important question is, how to gauge the credibility of a lender or of a particular investment scheme? The answer is ICRA ratings.
ICRA is an Indian independent and professional investment information and credit rating agency. Now, being an early entrant, ICRA is one of the most credible and trusted credit rating agency in India, and its prime responsibility is to analyze and evaluate the credit risks associated with the rated debt obligations/issues.
Summing up, ICRA rates the short-term and long-term investment plans offered by various financial institutions in India. ICRA’s rating can give you an idea of how safe your money is posted investing in a particular scheme.
ICRA’s Rating for Fixed Deposit
MAAA indicates highest credit quality of the investment. Fixed Deposits from reputed financial institutions like Bajaj Finance comes under MAAA rating of ICRA. Such investment carries the lowest possible risk of default.
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.