Benefits of Fixed Deposits (FD)
Apart from the several advantages associated with fixed deposit, the major benefits are as follows:
1. Guaranteed Returns: FD investments provide assured returns and they are very less prone to risk, investor invest in FD as the risk level is low and there is low chance of losing the principal investment. Under FD, on maturity the investor gets principal invested amount along with interest absolutely risk free.
2. Fixed Interest Rates: As there is no affect of external forces on the FD, the interest rates remains unaffected from any volatility throughout the invested period. So there is a sense of relief to investor that they will get the same interest rate at which they subscribed the FD. FD interest rates are better than the normal savings bank account.
3. Loan Facility: Investors get the feature of raising loan against FD, as now-a-days banks have provided the option of loan against FD and it gives an added advantage to investor as FD is highly liquid and a trusted and widely accepted instrument.
4. Low Cost: Another major advantage of FD is that they are extremely cost effective, generally banks do not charge any extra fees specifically related to FD account If investor has an already opened saving or current account. Also, no major maintenance is required in FD investment scheme which attracts investors.
5. Flexibility: There is a high degree of flexibility associated with FD accounts as they allow investor can decide the tenure on his own and also he may decide whether he wants to extend the fixed tenure or not. Also, the option of premature withdrawal is available.
6. Tax Saving: Investments under FD for the tenure of 5 years and above comes under the 80C deduction, which gives investor the advantage of tax savings up to the limit of 1.5 lacs. Any interest income is also exempt up to 40,000 and 50,000 in case of senior citizens.
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