Fixed deposits have been consistently popular through ages and economic demographics. There have been updates recently in Section 80C of the Income Tax Act. They have cemented the significant financial advantages that one receives by investing in a fixed deposit. Here is an in-depth look at the different advantages of investing in fixed deposits in 2018.
1. Guaranteed returns
The only investment option that guarantees high returns irrespective of fluctuations in the stock market is a fixed deposit. With high rates of interest that remain fixed throughout the tenure period, fixed deposits are not prone to any risk. Instead of keeping your funds dormant in a savings account where it will incur a very low interest, invest in a fixed deposit to gain a substantial amount of interest.
2. Easy Access
In the case of an unforeseen financial crisis such as a medical emergency or any other urgent obligation that you need to take care of, you can use your FD as collateral for a loan. There are provisions that will allow you to apply for a loan that is up to 60-70% of the amount in the fixed deposit.
3. Flexibility of tenure.
You can choose the duration of your tenure when it comes to investing in a fixed deposit. Tenures for fixed deposits can range from 1-5 years and also extend up to 10 years. It is advisable to opt for a short term fixed deposit to avail the returns that will beat unexpected inflations.
4. Flexibility of Plan
There are primarily two types of fixed deposit plans - Cumulative and non-cumulative fixed deposit plans. They both have their unique advantages and cater to different investors. Cumulative fixed deposits provide returns after the end of tenure, making them ideal for the investors who wish to build a retirement corpus. Whereas non-cumulative fixed deposits provide returns on a monthly or quarterly basis which is in turn ideal for those who want to use those returns to fund their expenses. Choose a plan that is best suited to your needs.
5. Tax Benefits
According to the latest budget, senior citizens can now avail of more deductions on the earnings from the interest incurred from fixed deposits. Prior to the budget of 2018, interests were tax- free for earnings up to Rs. 10,000. This limit has now been raised to Rs. 50,000.
Being risk-free, tax efficient with extremely high interest rates and flexibility, makes fixed deposits smart investment options for people across age groups and financial strata.
1. Guaranteed returns
The only investment option that guarantees high returns irrespective of fluctuations in the stock market is a fixed deposit. With high rates of interest that remain fixed throughout the tenure period, fixed deposits are not prone to any risk. Instead of keeping your funds dormant in a savings account where it will incur a very low interest, invest in a fixed deposit to gain a substantial amount of interest.
2. Easy Access
In the case of an unforeseen financial crisis such as a medical emergency or any other urgent obligation that you need to take care of, you can use your FD as collateral for a loan. There are provisions that will allow you to apply for a loan that is up to 60-70% of the amount in the fixed deposit.
3. Flexibility of tenure.
You can choose the duration of your tenure when it comes to investing in a fixed deposit. Tenures for fixed deposits can range from 1-5 years and also extend up to 10 years. It is advisable to opt for a short term fixed deposit to avail the returns that will beat unexpected inflations.
4. Flexibility of Plan
There are primarily two types of fixed deposit plans - Cumulative and non-cumulative fixed deposit plans. They both have their unique advantages and cater to different investors. Cumulative fixed deposits provide returns after the end of tenure, making them ideal for the investors who wish to build a retirement corpus. Whereas non-cumulative fixed deposits provide returns on a monthly or quarterly basis which is in turn ideal for those who want to use those returns to fund their expenses. Choose a plan that is best suited to your needs.
5. Tax Benefits
According to the latest budget, senior citizens can now avail of more deductions on the earnings from the interest incurred from fixed deposits. Prior to the budget of 2018, interests were tax- free for earnings up to Rs. 10,000. This limit has now been raised to Rs. 50,000.
Being risk-free, tax efficient with extremely high interest rates and flexibility, makes fixed deposits smart investment options for people across age groups and financial strata.
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