If there were one risk-free investment every hard earning middle-class man would opt for, it is a fixed deposit. If you are looking to save considerable sums of money for the future, a fixed deposit is probably your best bet.
It not only prevents you from spending money that is meant to be saved but also adds interest to it over time. But there is a catch here.
All fixed deposit schemes aren’t the same. To get the best returns on your deposit, you would want a scheme with a high-interest rate. Safety is also essential. Here are a few tips for choosing the best fixed deposit schemes for yourself:
● Rate of Interest
One of the primary factors to look for when choosing an FD scheme is the rate of interest. You should compare interest rates from several websites and choose the one with the best deal. For instance, PNB Housing finance FD rates range from 6.65% to 7% depending upon the tenure. But don’t fall for just the interest, there are other factors to keep in mind.
Fixed Deposit is a long term investment. For most people, it’s their life savings. Don’t blindly go for schemes offering high-interest rates. It’s essential to test the scheme’s credibility. Ideally, you should look for A-Rated schemes. Alternatively, ratings from ICRA and CRISIL can also testify to the reliability of the provider.
Understand the importance of the lock-in period. You won’t be able to cash out your money before that. Best fixed deposit schemes with higher durations would offer you higher interest rates. But you should weigh in your requirements and choose the tenure less than the time you’d need to cash out.
● Premature Exit
If you are not sure of the time after which you’d need money, it’s best to choose a scheme with a premature exit facility. This gives you the liberty to cash out your sum before the end of the tenure.
Of course, the PNB schemes without a premature exit would offer you a higher PNB Housing Finance FD interest rate. But then again, it will bind you to a bond and restrict you from receiving your money before the end of the tenure, so choose wisely.
● Interest Payout Frequency
You can choose from the options of intervals in which you want to make deposits for your scheme. Likewise, keeping a tab on the interest payout and calculation. Different schemes offer different frequencies of payouts, including monthly, annually, quarterly, and half-yearly. The more the frequency, the better interest you’ll get.
Unforeseen circumstances are part and parcel of life, and you might need to break your FD before the end of the tenure or maturity. Check for the penalties you’d have to incur in case you decide to do so. Most NBFCs only lower the interests in such a case, and that should be your priority.
A Fixed Deposit is indeed excellent to save money for bigger things in the future for you and your loved ones. Analyzing these aspects would ensure you reap the maximum benefits for your investment and perseverance.