Are you looking for a safe, secure and convenient option to invest? Fixed deposit is the answer to all your investment queries. It provides flexibility and decent returns, which are risk-free when withdrawing funds. The fixed deposit interest rate is higher than the rates provided in the savings accounts and is the banks’ oldest and safest investment option.
It helps you diversify your investment portfolio in different fixed and variable income sources. You can also use a loan or an overdraft facility against your FD amount. You can also withdraw funds as and when required, making it liquid compared to its counterparts.
Investing in fixed deposits can protect you from market uncertainties. You must compare the changing interest rates and choose the best time to invest in these deposits to get higher returns.
What is a fixed deposit?
As the name suggests, a fixed deposit is an investment vehicle that deposits money in a financial institution for a specified time and offers fixed returns. You can choose your investment plan wisely using a fixed deposit calculator, as it gives you a clear picture of the interest rate, EMIs to be paid and tenure.
They become an attractive option for people who are risk averse as the interest rate is predetermined at the time of investing. The only thing that can affect fixed deposit returns is inflation, as it erodes the value of your money.
What is the impact of interest rate change on fixed deposit returns?
● Duration and longer tenures
The interest rate affects fixed deposits for a longer tenure than those for a shorter term. This is because the longer the time, the longer the deposits will be exposed to changes in the interest rate.
● Returns
The fixed deposit interest rate offers changes concerning the market conditions, which can affect your returns. So, always choose a plan according to the interest rate offered, as high-interest rates give higher returns and vice-versa.
● Re-investment
If you are expecting the interest rate to fall in the future, then choose a plan that is for a shorter period, as you can then re-invest the increased amount with a higher interest rate.
● Lock in period
Since the deposits in FDs are put in for a fixed period, the impact of the interest rate change is mainly on the prospective investments you could have made if the funds were not locked in, i.e., the opportunity cost can be huge.
● Inflation
Inflation impacts an FD’s actual returns by eroding the capital’s real value, thus affecting your investment deal.
Why use a fixed deposit calculator?
A fixed deposit calculator saves you time and effort and guarantees accurate and precise results, short of human error, as it calculates interest rate and maturity amount online.
It would help if you had a calculator because the interest rate keeps compounding over time, positively impacting your savings.
You can also compare different fixed deposit rates, by putting the details of each offer and seeing which one provides the most attractive option.
Which is the best app to invest in Fixed deposits?
I recently started working and was looking to invest my idle capital in a secured investment plan when I came across Fixed Deposits through Bajaj Finserv.
Their interest rates are higher than their competitors, fetching you a higher return. They also offer special tenures with increased interest rates occasionally, giving you a chance at high savings.
Conclusion
If you plan to invest and are a beginner in this domain, investing in fixed deposits would be the best option for you as your returns would be fixed and won’t be affected by market fluctuations. You can calculate FD interest rates using their calculator to get correct and precise values to make an informed decision.