In February 2019, the RBI slashed its lending rate by 25 basis points, bringing it to 6.25% from 6.50%. This has a direct impact, as it translates into a lower loan and FD interest rates. Since a fixed deposit relies on the power of compounding interest to give you sizeable returns, investing in a promising FD before interest rates drop will help you earn a higher ROI. In addition, FDs don’t just offer you good returns, but other outstanding investment benefits too. Look at the top five reasons to invest in an FD.
Stable investment environment
Fixed deposits are not linked to the market and hence keep your finances in a state of low risk. In fact, statistics show that FDs gave higher returns (6.25%) than equities (2.70%) and debt funds (5.50% 5.90%) throughout 2018’s volatile market. With the market expected to take shape only post the elections, FDs continue to be a compelling option if you are risk-averse.
When choosing an FD, remember that bank FDs keep your finances safe, while company FDs involve some measure of risk but offer higher returns. To mitigate the risk, look for a company FD that carries a high credit rating like the Bajaj Finance Fixed Deposit. It has ICRA’s MAAA rating and CRISIL’s FAAA rating, so you can be sure of your money being 100% safe.
Generous investment returns
Once you invest, your finances grow at a constant interest rate through the tenor. Your interest is compounded, which means that your returns pick up the pace as your investment tenor increases. Today NBFCs like Bajaj Finance offer FD interest rates that beat those offered by EPFO, NSC, and PPF.
While NSC and PPF offer interest rates of 8% and EPF offers 8.65%, the Bajaj Finance FD allows investors to enjoy an interest rate of up to 8.75%. Here, existing customers benefit from a 0.25% interest rate hike on FD renewal and senior citizens profit from a 0.35% higher interest rate. Putting all of this together, you can earn up to 9.10% from a Bajaj Finance FD as a senior.
Flexible maturity terms
Whether it’s your child’s overseas education that you need to finance in one year or a family wedding that’s coming up in 4 years, you can get timely liquidity by parking your finances for a tenor that best suits you. Financiers offer maturity terms that range from days to years, so you can tailor the investment to meet your short- and long-term goals.
Another way to ensure continuous liquidity is to ladder your FDs. This involves staggering your investments over varying maturity terms. For example, if you want to invest a sum of Rs.5 lakh and desire liquidity every year, you can split the amount into smaller principals of Rs.1 lakh each and invest them for tenors of 1 year, 2 years, 3 years and so on. With different FDs maturing at different times, you can enjoy continuous liquidity without worrying about prematurely withdrawing your investment.
Customizable interest payouts
Interest earned on an FD can either be taken at maturity or can be availed at regular intervals. While the first case guarantees better returns, the second offers timely monetary assistance.
Financers generally offer interest payouts on a monthly, quarterly, bi-annually, or yearly basis. Based on your financial obligations, you can choose your payout frequency and meet your needs comfortably, be it recurring medical bills, utility expenses or EMIs.
Useful collateral option
In the event of a cash crunch, you can turn your FD into a quick source of funding by using it as collateral to get a secured loan. This way you get the finance you need and your FD continues to accrue interest throughout the tenor! Financiers offer a percentage of the value of your FD as the loan amount. This differs between financiers and may range from 70% to even 90% of your fixed deposit’s worth.
Having considered these compelling investment benefits, waste no more time in investing in a Fixed Deposit with a reputed issuer like Bajaj Finance. As you plan your investment, make use of the Online FD Calculator to forecast returns and choose a tenor and payout frequency that’s right for you.