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Reasons Why You Should Invest in Fixed Deposits

 India has been always Known as the country of savers. For years, investors have chosen to invest their money in fixed income securities such as fixed deposits. This, investing in fixed deposit is very popular for earning guaranteed returns.

However, due to Decreasing bank interest rates and better investment choices like equity and mutual funds, new creation investors decide to invest in market-linked products. But this does not decrease the significance of fixed deposits in your portfolio.


FDs can be a good addition To your investment portfolio and here are some reasons why Investing in fixed residue is advantageous

Reduce portfolio risk

The key to wealth Production is the allocation of resources. Different asset classes like equity, mutual funds, gold, etc bring diverse yields on investment. For example, mutual funds give you money for the growth potential of equities over long term. To the contrary, fixed income securities like fixed deposits bring equilibrium as the returns are ensured. A diversified investment portfolio makes sure the doubt on your yields is stabilized and you have a stress-free investing encounter.

Encourages the habit of saving

Saving is a habit not Many excel at but wish to wish to squint to get a fantastic balance during times of demand. Fixed deposits help is raising savings. Since investing in fixed deposits doesn't incorporate any substantial risk, individuals are more inclined to invest in FDs for increasing savings.

Choice between cumulative and non-cumulative FD

Fixed deposits Provide you with the choice between cumulative and non-cumulative deposits. You can choose if you want to receive the interest. If you are dependent on the interest amount for paying off your monthly bills, EMI invoices, etc.. opting for quarterly or yearly payoffs is a good plan.

Alternatively, you Can keep your deposit locked up until the end of your tenure. When you opt for cumulative returns, you gain from the compound interest that provides you high yields.

Flexibility to draw funds

During fiscal Emergencies, you can draw your FD before adulthood. You may have to pay a specific fee. However, this approach is straightforward. The flexibility supports you through fiscal crises. Being among those procured and risk-free forms of investment, you can organize your future by building riches.

Tax saving investment

All banks and NBFCs Provide tax saving fixed deposit options to their customers to bring their resale income. This brings down the tax to be paid as well. These schemes include a lock-in period of five years. The amount cannot be removed before the specified time (only in the event of the premature passing of the applicant, premature withdrawal is allowed.)

Avail loan on fixed Residue

Few financial Institutions offer credit facilities against your fixed deposit account. Other than this, you can avail these loans without availing some additional eligibility requirements. Unlike fixed deposits, equity or mutual funds don't offer any credit facility.

Acts an income strategy for retired

Should you invest your Funds to non-cumulative fixed deposits after retirement, earning a regular and comfortable income from it is easy. This is particularly helpful for people that don't rely on another person for support for retirement.

Final words

Those willing to Start a fixed deposit needs to have a minimum amount of Rs 5000 to invest. Moreover, though the returns are guaranteed, the returns might fall short for some to meet the financial goals of many individuals. Thus a segregated investment in numerous funds like equity, mutual funds via SIPs can help meet financial goals.

Nonetheless, fixed Deposits remain a popular wealth-generating alternative and is among those Easiest ways to begin an investment portfolio.


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