The Benefits of Investing in Fixed Deposits: Why They Remain Popular
Fixed Deposits (FDs) have long been one of the most popular investment options in India, particularly for individuals who prioritise safety and steady returns over higher, yet riskier, profits. Over time, FDs have evolved, with banks and financial institutions offering a range of tools like FD apps and calculators, particularly designed for senior citizens. Despite the rise of various modern investment options, fixed deposits remain a staple in financial planning. This article explores why FDs continue to be a preferred investment choice and how tools like the FD app and FD calculator for senior citizens enhance their appeal.
What is a fixed deposit?
A fixed deposit is a financial instrument provided by banks or Non-Banking Financial Companies (NBFCs), where you deposit a lump sum of money for a predetermined tenure at a fixed interest rate. The interest earned on FDs is generally higher than that of regular savings accounts, making them an attractive choice for risk-averse investors. At the end of the tenure, you receive your initial investment along with the accrued interest.
Benefits of investing in fixed deposits
1. Safety of capital
One of the primary reasons fixed deposits have maintained their popularity is the safety they offer. Unlike market-linked investments, which are subject to fluctuations, FDs guarantee the return of both principal and interest. This assurance makes FDs ideal for individuals who are looking for risk-free investment options, especially senior citizens or those nearing retirement.
2. Fixed returns
The fixed interest rate offered by FDs ensures that investors know exactly how much they will earn by the end of the tenure. This certainty helps with financial planning, as it eliminates the unpredictability associated with other investment options such as mutual funds or stocks. Whether interest rates in the economy rise or fall, the rate agreed upon at the time of investment remains unchanged.
3. Flexible tenure options
FDs offer flexibility in terms of tenure, allowing you to choose the duration of your investment according to your financial goals. The tenure can range from a few months to several years, making it easy to match your investment horizon with your needs. For example, a short-term FD could be ideal if you are saving for a specific event or purchase, while long-term FDs can help in building a retirement corpus.
4. FD calculators for senior citizens
Senior citizens often benefit from special interest rates on fixed deposits. To maximise these benefits, an FD calculator for senior citizens is widely available online and on banking apps. These calculators allow senior investors to input various details like the deposit amount, tenure, and interest rates, helping them estimate their returns with ease. It is an excellent tool for financial planning, as it provides a clear picture of how much interest they will earn.
5. Convenient FD apps
With the rise of digital banking, managing FDs has become easier than ever. Most banks offer an FD app that enables investors to open, manage, and monitor their fixed deposits right from their smartphones. An FD app allows you to compare interest rates across tenures, renew maturing deposits, and even close your FD online. This level of convenience has further enhanced the popularity of fixed deposits among both younger and older investors.
6. Regular income option
FDs also offer the option of receiving interest payments at regular intervals—monthly, quarterly, or annually—making them an excellent source of steady income for retirees. This feature is particularly beneficial for senior citizens, as it provides a predictable flow of income, which can be used for daily expenses or medical needs.
7. Tax-saving benefits
Tax-saving fixed deposits come with a lock-in period of five years and offer tax deductions under Section 80C of the Income Tax Act. Although the interest earned on FDs is taxable, the principal amount invested in a tax-saving FD can be deducted from your taxable income, up to Rs 1.5 lakh per financial year. This makes FDs an attractive option for individuals looking to reduce their tax liabilities while securing a guaranteed return.
Why FDs remain a popular choice
Despite the growing popularity of alternative investments like equities, mutual funds, and real estate, fixed deposits continue to attract investors for several reasons. Firstly, FDs offer guaranteed returns, which provide peace of mind, especially during times of economic uncertainty. Additionally, the availability of user-friendly tools like an FD calculator for senior citizens and apps has simplified the process of investing and managing FDs, making them more accessible.
Moreover, with special interest rates for senior citizens and the added advantage of tax-saving FDs, fixed deposits continue to cater to a broad range of investors, from young professionals to retirees. The ability to customise the tenure and the option of earning regular interest payouts are other factors that have contributed to their sustained appeal.
How to make the most of fixed deposits
To optimise your FD investment, it is crucial to take advantage of the tools and resources available, such as an FD calculator for senior citizens and an FD app. By using these tools, you can compare interest rates, calculate potential returns, and plan your investments more effectively.
If you are a senior citizen, make sure to explore the special interest rates offered to you. Use an FD calculator for senior citizens to estimate how much you can earn over various tenures. Additionally, use an FD app to monitor your deposits and renew them when necessary, ensuring that your money continues to grow without unnecessary delays.
Conclusion
Fixed deposits remain one of the most trusted and reliable investment options in India, offering a blend of safety, steady returns, and flexibility. The convenience of an FD app and the utility of an FD calculator for senior citizens, make managing these investments easier than ever. While the financial landscape is evolving, FDs have proven their resilience by continuing to serve as a stable, low-risk investment option for individuals at various stages of life. Whether you are planning for a secure retirement or saving for a major life goal, investing in a fixed deposit can help you achieve your financial objectives with confidence.
Disclaimer: This article is published in association with Bajaj Finserv and not created by TNM Editorial.