Remarkable changes can be seen in the thinking and behaviour of different generations. But while our views vary, one investment recommendation has stood the test of time: to invest in a fixed deposit. Like generations before them, our parents swore the durability and the advantages of this investing instrument. It makes us curious why a fixed deposit account makes it so crucial to Indian families’ investment?
What makes Fixed Deposits so popular among Indian households?
- Banks have historically had to decide a uniform fixed deposit interest rate for tenures ranging from 15 days to one year. The upper limit was 8%.
- However, when this ceiling was lifted, 1985 became a turning point for Indian FDs. In 1992, fixed deposit interest rates were deregulated, and their returns no longer related to maturity. Banks could pay interest of up to 13% on any deposit made for more than 46 days.
- The RBI fully deregulated the FDs in 1997, and bank rates and fixed deposit interest rates were unlinked.
It is essential to properly understand the many advantages it provides to know why people of all ages have been investing in fixed deposits. Following are some of the factors explaining the benefits of fixed deposit.
Risk-free investment
Sense of security is something that professionals of all ages respect more than anything. That is why Fixed deposits have become and remained so common through decades.
Some opportunities for savings, such as inventories and mutual funds, may offer more massive returns. However, these returns depend on existing market patterns. In the other hand, a permanent deposit account is established to hold the resources secure. This minimises the losses and avoids downturns in your investments.
Promised Returns
Saving as FD effectively assures no losses due to an uncontrollable cause on the returns of your savings. You will get the guaranteed returns exactly as you expected, unlike other types of investing. Furthermore, you would see better returns from a fixed deposit account than from a savings account thanks to the high-interest rates usually associated with FD. For Indian families, this makes them an excellent saving choice.
Flexible term
One of the most significant advantages of FD is the versatility of terms that will satisfy all sorts of financial needs. Fixed deposits fulfil the investment needs of everyone, regardless of age or economic background with investment tenure options varying from 7 days to 10 years.
It is easy for you to decide what your returns will be and prepare your future finances accordingly after you have chosen your tenure. By placing your FD tenures to mature at the perfect time, you can also look consequently to plan your future financial targets.
Fund for emergencies
An FD will provide you with a secure financial source of comfort in situations of financial emergency. Furthermore, you can take a loan against the FD in the event you do not wish to break your FD. In any case, having FD means you’re not unprepared for a financial disaster.
Extra advantages for senior citizens
Fixed deposits are a perfect financial choice for people of all ages, regardless of all the factors mentioned above. FDs are, however, much more valuable if you are a retiring senior citizen or a retired worker. Fixed deposit interest rates offered to senior citizens are higher than regular term deposits which mean guaranteed high returns for all of the potential retirement needs.
Credit Card on FD
A secured credit card can be obtained through an FD account. Similar to a loan, these credit cards have up to 90 percent of the value of the FD. These cards also have lower interest rates than conventional credit cards. Persons who do not meet the credit score criteria for unsecured credit card options may use these options.
Conclusion: Use a Fixed Deposit calculator to calculate the estimated amount, tenure and interest rate for you if you are looking for the most versatile and lucrative Fixed Depose account on the market. See your money rise at assured earnings and with no risks on the tenure of between 7 days and ten years.
