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Many of us have heard about the different benefits of fixed deposit schemes while consulting with financial experts and maybe even while having a normal discussion with friends at a coffee shop in the evening or during a morning walk. But how many people have a clear understanding of the benefits of fixed deposit schemes? Almost every bank in India offers such schemes and among them some offer the best fixed deposit rates. But the most surprising truth is that many Non-Banking Finance Companies prominently known as NBFCs also provide mind-blowing FD schemes. This simply means that FD benefits attract a lot of investors in India as many people in the country belong to the working middle-class category and like investing in financial instruments that offer assured returns. But is it only because of the “assured returns” that people come in? To find out the answer to that question, let us look in detail at some amazing benefits of fixed deposit schemes and their importance in the overall financial portfolio of investors.
The first and foremost reason that many people get attracted to invest in FD schemes is that these are very easy to understand by even common people because of the simple functionality. A person does not need to have in-depth knowledge of financial technicalities when it comes to investing in a fixed deposit scheme. The investor has to deposit a particular amount of money by opening an FD account in a bank or an NBFC and has to maintain it for a said period of time called the lock-in period. After the lock-in period is over, the invested amount of money along with the interest paid together called the maturity amount will be withdrawn by the investor.
As mentioned earlier, one of the attractive benefits of fixed deposit schemes is that they offer fixed returns which will be declared as part of the scheme details by the bank or NBFC to the investor and these can also be checked out on the company’s website. The best part is that these FD schemes are never influenced or impacted by market fluctuations which provides a great sense of security and relief to the investors.
Though there is a lock-in period for the investment amount, an investor need not worry about locking in the money for a long period of time. Based on his or her requirements, an investor can choose from 1-year to 5-year time periods but of course, based on the lock-in period, the fixed deposit interest rates will also change.
As mentioned earlier, one of the amazing benefits of fixed deposit schemes is that an investor who wishes to invest in them need not know much about the market conditions and understand its dynamics. But the truth is even aggressive investors like people who from other FD benefits such as assured returns, these schemes are a great hedging option to them. Since fixed deposit interest rates are not influenced by market conditions, the overall financial portfolio of investors is exposed to fewer risks.
If assured returns is one of the many fantastic benefits of fixed deposit schemes, then the variety of flexible interest payout options is like icing on the cake. Yes, the investor at the time of opening the FD account, can opt for the type of interest payout option such as monthly, quarterly, or even annually whichever interests the investor. A much better option would be to choose the reinvestment option which will give the investor the compounding advantage as the entire amount can be withdrawn at the end of the FD tenure.
Certain banks have a rule of maintaining a particular amount of money as a minimum balance in savings accounts and if the savings drops below that, a fine will be levied. But in recent times, some banks have come up with a flexible option which can be truly beneficial for FD investors. According to this recent rule change, if a person has a fixed deposit investment that has an amount more than the minimum balance or the Average Minimum Balance (AMB) stated by the bank, then the person’s savings account will not be charged a fine if the balance drops below the required limit. So, alongside earning fixed deposit interest rates for the investment, even the savings account will be spared from deficit fines or charges.
By now one would have clearly understood the true beneficial nature of FD schemes and why he or she should not think twice about investing in them. Such amazing benefits of fixed deposit schemes provide an excellent opportunity for investors especially the younger generation who kickstart their careers right after college. This is because opening a FD account does not need vast knowledge about the financial world and also provides a very safe option to accumulate wealth with assured returns for the future!
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