The Fixed Deposit
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.
It is the responsibility of every parent to offer a safe childhood and gift an even more secure future to their children. Speaking in terms of finances, there are various investment schemes where you can put in your money towards your child’s future. However, you must choose the one which offers assured returns and which aptly matches your financial requirements. Let’s know more about them here -
During your professional work you may set aside a fixed amount every month towards your child's future in provident fund account. This can be withdrawn at the time of maturity to cater to various financial needs.
If you are are a risk-taker then then you can deposit in equity mutual funds. Though, they depend on market fluctuations they will still help you earn appreciable interest income by diversifying your investment in various funds.
This is a low-risk, low-maintenance savings option offered by leading institutions such as NBFCs. They provide higher rate of interest on FD starting from 8.75% onward which helps to accumulate wealth and secure it for your child’s future needs. Besides, interest up to Rs. 10,000 is tax free. To save tax on income of more than this amount you can submit Form 15G and Form 15H to the lender. Moreover, there are two types of withdrawals available - cumulative (where amount is collected at maturity) and non-cumulative (where amount is collected at monthly, quarterly, half yearly and annual basis).
Buying a property is another lucrative investment option. As this is a long-term investment you can choose to gift them as a heritage thus, securing their future.
Saving schemes today let you prepare well in advance for the future. They let you divert finances to where they will be required the most. But before you put your money into them you must know about them completely to make proper investment decision.
Fixed deposit is one such scheme which offers you low-risk, low-maintenance finance option to fix a lump sum and earn appreciable income on it. Let’s know more about it here -
Major NBFCs offer fixed deposit scheme with higher interest rate starting from 8.50% onward. It is a lucrative option as you can fix the amount and earn appreciable income. This income is tax free too up to an amount of Rs. 10,000. To save tax on income of more than Rs. 10,000 you can submit Form 15G and Form 15H to your lender.
Moreover, senior citizens receive 0.35% higher interest on the base rate. They can book the deposit online with minimum paperwork in their name or for their family. Upon renewal, depositors receive 0.25% higher rate on the base rate and thus can earn more on their fixed amount. Besides, you receive flexible tenure of 12 to 60 months to fix the amount and earn income.
Also Read: Best Investment for Senior Citizens
There are two types of withdrawals available - cumulative (to withdraw amount at the end of the maturity period) and non-cumulative (to withdraw at quarterly, monthly, half yearly and annual basis).
Rated high on safety and stability with ICRA’s MAAA (stable) rating and CRISIL’s FAAA/ stable rating so the deposit is never at risk. It helps to accumulate wealth and gradually grow your corpus with time.
You may also Read about: What is the Minimum Credit Score you Need to Avail a Loan
Watch the video below to know what are the Benefits of Fixed Deposits for Senior Citizen:
Retirement is a stage where you will no longer get your regular income. So, you must start organizing your finances early in life. You must choose the proper way to target a large retirement corpus as well as have options through which you can generate income even during retirement. By the time you retire, you must have enough money as savings. For which you can use different investment options such as Senior Citizen FDs, Senior Citizen Saving Scheme (SCSS), and Provident Fund (PF). But, investing in any mode will not help until and unless you strategize the sources of steady income while planning your finances. Here are a few useful strategies that will help you to gain a lot.
Consider the External Factors
You must consider the external factors, while investing in schemes where you will get the returns in the long-term. Your retirement plan may facilitate regular and guaranteed income during your retirement. So, it is essential to check the external factors such as market volatility, inflation, as well as unforeseeable emergencies, that would affect the investment returns and interest rates. This strategy will be future-proof.
Include Guaranteed Income Options
You should also ensure guaranteed income within fixed intervals. Fixed Deposits could be an excellent investment option for retirees so that they can earn higher and regular returns without facing any risk. You can even use the FD calculator before you decide on the type of FD you want to choose, to make the most of your fixed deposits.
Retirement is a time to sit back, relax or do something for which you never had the time before. A lot of this depends on your financial independence. To help you plan for your retirement there are several investment options for senior citizens that you may invest in today. Which one you opt for will depend on your personal preference. However, to help you make an informed decision here are some reliable saving schemes for you to consider -
This is a low-risk, low maintenance saving option which helps you save for immediate and future financial needs. Major NBFCs offer lucrative high interest rates on the deposit to help you accumulate wealth and grow corpus overtime. Interest rates start from 8.50% onward with flexible repayment tenure of 12 to 60 months. Senior citizens get additional interest rate of 0.35% on the base rate and they can easily book the deposit online with minimum paperwork.
Interestingly, the deposit offers two types of withdrawals - cumulative and non cumulative. In the former you can withdraw amount from the deposit upon maturity while in the latter you can withdraw at quarterly, monthly, half yearly and annual basis.
Post Office Monthly Income Scheme
Senior citizens can book a post office saving account with cash only. The depositor can choose a nominee for the account. The account can be transferred from one post office to another.
Account can be booked for a minor too and it can be converted to their name once they attain majority. The depositor has to put in the money for a minimum period of 5 years during which they cannot withdraw this amount. While, they can partially withdraw after a period of 7 years and fully withdraw it after 15 years.
Additional Read: Post Office Monthly Income Scheme Vs Fixed Deposit: Which Is Better for Senior Citizen?
Fixed deposit has been the most preferred investment avenues of Indians. Studies have shown that 95% of Indians preferring to park their money in fixed deposits. However, in mutual funds you can gain more interest.
So, before deciding the best saving plan India, you need to study the benefits of both the investment plans.
Benefits of Mutual Fund:
1. Small Amount Investment
If you do not have a large sum of money or you do not want to take the risk, you can start investing in mutual funds with a small amount. You can set up a systematic investment plan (SIP) with a small amount of Rs.500 per month only. When your salary or cash inflows will increase, you can increase this amount.
2. Potential Inflation-adjusted Returns
Mutual fund is one of the best long term investment plans, that generate inflation-adjusted returns. Generally, with inflation the value of wealth gets eroded with time. Mutual funds mainly equity-oriented funds, are better than the other asset classes as they have the best potential to generate inflation-adjusted returns in the long run.
3. Flexibility to Use
You can use the mutual fund amount anytime you want to. In case of emergency, ultra-short duration funds are ideal for meeting short-term goals such as a vacation, home renovation, etc., or long term goals such as higher education, etc. you can use mutual fund.
To know the benefits of a fixed deposit, read:
Before you proceed with your investment plans, you must be aware of a few facts about the applicable deductions on the income generated from the investment and how to avoid them.
Having said that, if your gross annual income (which includes the income from the primary source: work, business + income from secondary sources such as interest income generated from investment) doesn’t exceed the taxable limit; you can claim the TDS amount deducted.
How can you do that?
You can use the form 15G or 15G for the purpose. You can fill the form 15G and 15H, whichever is applicable in your case and submit it to the bank asking them not to deduct any TDS because your income is below taxable limit.
What conditions to fulfill while submitting the Form 15G and 15H?
Last but not the least, some people find it difficult to decide the right form to use. Hence, take help from the expert and choose the right form to use.
Read more at: Save TDS on Interest Income with Forms 15G and 15H
Also Read about What Are the Best Short-term Investment Options:
Tax planning is an integral part of financial planning. The task is deemed essential for two reasons: (1) tax planning helps safeguard your income from being consumed in paying taxes, (2) it helps you gain tax-free income from your investment. You can ensure a highly efficient, viable tax saving investment portfolio by investing in the right place. In short, you have to find out the best investment schemes to invest in.
How can you do that? Find the right investment tools to invest in? You can consider factors such as safety, liquidity, the tax treatment of the returns generated, and whether they fit into your overall financial plan. If you still feel confused, continue reading and let us take you through best saving options in India to help you achieve your tax planning goals.
Additional Read: Looking to save your taxes? Know the best savings schemes in India
We all want to know some basic tricks and tips to multiply our existing money and wealth. If you can successfully increase or grow your wealth, it will offer you various benefits such as a comfortable lifestyle and financial security post retirement. To make it possible you need to take the right financial decisions - savings and investment.
For example, you have Rs. 50 lakhs and you want to invest in Fixed Deposit monthly Income Scheme, then make sure to have a balanced mix of investments. This will help you to gain more in the long-run.
To get a balanced or healthy mix of investments, you need to invest in a diversified portfolio. But, before you do it, you need to examine certain factors such as the risk appetite, the type of instruments suit your financial goals, and many more. You can invest in market securities like shares and mutual funds as these instruments provide a higher rate of return, but these are volatile and risky. So, to balance these risks, try some secured ways. Invest in FDs and tax-free bonds, so that, you get assured returns and keep your invested amount safe.
Also Read: Busting the Commonly Prevailing Myths About Personal Loan
You may have sufficient income, but to build substantial wealth you need to look for other avenues to generate more income. You can also think of investing in real-estate after the improvements like RERA, as real estate market is set to grow at the rate of 30% over the next decade.
So, selecting these option will allow you to multiply your investment in the long run.
To know more, read: How to Become Rich using Passive Income
While interest from investment is a critical factor for investing, Fixed Deposits investments also allow people to secure loans, credit cards, and overdrafts on the basis of fixed deposits. Loans can be issued on 85% amount of the fixed deposit amount, empowering people to meet their immediate financial needs while also taking care of future expenses through investment. Other investments like equity funds do not provide such benefits to investors.
While Fixed Deposits require people to set aside the amount for a fixed tenure, it is also possible to prematurely withdraw their FD amount any point of time. However, for getting the full scope of benefit from your fixed deposits, it is advisable to withdraw amount after maturity of the Fixed Deposit Scheme. This flexibility of the investment presents benefits to many people, which is why Indians have always shown interest in fixed deposits.
While newer options have started being available in the market, people have a high awareness regarding Fixed Deposits as lenders have been providing it since many years. Moreover, other investments require people to understand terms like debt equity, net asset value (NAV), etc. Simplicity is a big advantage on the side of Fixed Deposits.
Get the Most Out of FDs with Bajaj Finance
Fixed Deposits are currently the best method of investing your funds with secured returns. While providing the highest security among Fixed Deposits, Bajaj Finance also provides the highest interest rates in fixed deposits, at a rate of 8.40%. You can access the Bajaj Finance website and create your FD investment account in no time. Furthermore, Bajaj Finance also provides 24/7 accessibility and an integrated FD calculator that helps you analyze the returns on your investment at maturity. While not the newest, Fixed Deposits are still one of the safest investments you can make as an Indian. Access the website now to get the highest returns. You can also refer to this link and discover the benefit of an FD over other options.
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.