Why Fixed Deposit Schemes are Better than Other Investments?

3 mn read

Despite falling interest rates across fixed income instruments and bank FDs, investors are keen on investing in fixed deposit plans as they can analyze the other benefits of investing in FDs. For example, you may avail of a loan easily if you have already opened a fixed deposit account in a bank or NBFC. The other reasons that make FD schemes better than other instruments are explained below:

A stable investment avenue 

Fixed deposit schemes are stable avenues because they do not determine your interest earnings on the basis of economic conditions or market forces. Instead, they offer an FD interest rate that does not increase or decrease till the date of maturity. 

 

While investing in bank FDs can secure your deposits, you can also invest in company FDs offered by NBFCs that have gathered high credit ratings from credit rating agencies. For instance, you can think of depositing in Bajaj Finance FD as this Bajaj investment scheme has received the highest credit ratings from CRISIL and ICRA. 

 

Better than small saving schemes 

 

Small saving schemes like NSC, SCSS, PPF, etc. are also stable avenues but they do not come with flexible investment and withdrawal policies. For example, the Senior Citizen Saving Scheme offers only a single tenor option of 5 years and its withdrawal policies are also a bit complex. Therefore, investing in a fixed deposit scheme that offers better tenor and withdrawal policies can prove to be a better alternative. 

 

For example, Bajaj Finance FD permits you to select any tenor between 12 and 60 months and it also provides smooth withdrawal rules that enable you to withdraw your deposits early if they have completed the initial period of 3 months. On the other hand, you need not think of withdrawing the FDs prematurely as a collateral-free loan as much as 75% of your FD value can be availed during a financial crisis. 

 

Easy prediction of returns 

 

Market-linked investment avenues do not allow you to determine the returns precisely as they are determined by evolving market trends and dynamics. As the tenor and interest rates offered by FD schemes are fixed, you can predict the returns smoothly. Moreover, you can avoid going through the complex calculation process by using an online FD calculator that is easily available on many websites on the internet. 

 

Convenient investment method 

 

Before investing in market-linked avenues like equities, stocks, etc. you will have to understand how changing government policies and economic conditions can affect your earnings. However, no such detailed analysis of the market needs to be done while investing in FDs. Also, many FD providers have adopted an end-to-end online investment procedure for facilitating convenience to their customers. 

 

Bajaj Finance FD employs such an online method as it not only provides an online FD form to initiate the process of investment but it also permits you to make the payment and finish the document verification process online. Even a 0.10% higher FD rate is provided for picking the online investment method. Senior citizens get a 0.25% excess fixed deposit interest rate on investing in this FD scheme. 

 

NRIs and overseas citizens are allowed to invest in Bajaj Finance FD through an NRO account. They get a flexible tenor spanning from 12 to 36 months. 

 

Laddering FDs 

 

By laddering fixed deposits, you can ensure that your immediate financial needs are met while progressing towards your long-term goals. This is possible as you can choose tenors of short and long terms for the deposits. Laddering also ensures that the impact of changing FD rates is minimized and you may also reinvest some of your interest earnings in a higher paying FD in the future. 

A feature known as multi-deposit is offered by Bajaj Finance FD. This feature can be used for depositing in multiple deposits after dividing the corpus into multiple deposits and picking a different tenor and fixed deposit type for every deposit. Also, it is possible to invest in all the deposits at once through a single cheque.

Loan against Fixed Deposits 

Loan against fixed deposit accounts is available after 3 months of opening it. Whereas in the case of other investments, this waiting time is longer. For instance, Public Provident Funds, You can be granted a loan after 3 years for a maximum period of 36 months. 

Against fixed deposits, you can get a loan of up to 80-90% of FD value whereas, with PPF, this loan limit is 25% of the total amount available in the account.

Interest Rates 

Fixed deposits provide higher interest rates and some privileges also. Fixed deposits with Bajaj Finance offers such as extra benefits for senior citizens (additional 0.25% interest rate), additional 0.10% interest rate on FD renewals and interest rate benefit of 0.10% if you open an online fixed deposit account.

 

Thus, investors find fixed deposits more flexible and convenient than other investment schemes. You can calculate returns on fixed deposits before investing your funds using the FD rate calculator. It is a ready-to-use tool that eliminates all manual calculations to calculate interest on an amount to be deposited. 

It is advised to investors that open fixed deposit accounts with a bank or other financial institutions bearing higher credibility ratings i.e. CRISIL AAA/STABLE and ICRA AAA/STABLE.

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