A fixed deposit is one of the best investment schemes as it allows you to earn substantial returns without subjecting your invested capital to market risks. It has been one of the most preferred investment options in India as it enables an individual to earn monthly or quarterly interest payouts by depositing a lumpsum amount.
However, the fixed deposit rates in India have been lowered due to the increase in recessionary trends in recent times. Bank FD rates have always been on the lower side as compared to company FDs but the bank FD rates have been further lowered due to the repo rate cut and other policies adopted by RBI to increase liquidity in the market.
This means that you have to put in more effort and explore more options to get high returns after booking an FD. Let us discuss some of these options now:
Invest in tax saving FD
The extra interest that you earn by booking a high paying FD might not make much difference post taxation.
However, by investing your savings in a tax saving FD, you can claim a deduction up to Rs. 1,50,000 in a financial year on the deposited amount.
Book a company FDs
Though tax saving FDs ensure both high returns and higher tax savings, the deposit amount is capped at Rs. 1.5 lakhs, and the tenor of 5 years is fixed.
If you are looking for a flexible and lucrative option, you can invest in a company FD. Company FDs always pay interest on the higher side and enable you to grow your investments at a higher rate even when the economy is feeble.
For example, Bajaj Finance is offering an FD interest rate of 7.35% which is almost 2% higher than average bank FD rates. Also, you get the flexibility of choosing the tenor between 12 and 60 months at your convenience.
Reinvest your returns
As the market-linked instruments are not performing as well in today’s time, it would be a better option for you to reinvest your FD returns at a higher rate.
You can also think of cumulative FDs because they add the periodic interest earnings to the principal amount and use it as a new principal during the next interest calculation schedule.
Bajaj Finance FD offers an option to renew your FD and you can also earn an additional 0.10% interest rate upon renewal of your FD. You can also book a cumulative FD with a tenor of 5 years to multiply your deposits at a steady pace. The multi-deposit facility allows you to ladder multiple FDs with a single payment cheque and you can easily reinvest the returns of these FDs or go for an auto-renewal.
Senior citizens get a 0.25% extra FD rate and the option of availing monthly interest payouts to meet regular expenses is also available for everyone. You can also avail loan against FD and premature withdrawal of funds. With the online FD calculator, you can know your returns in advance.
Moreover, you also get a 0.10% additional interest rate by filling up an online FD form to open an FD. Therefore, you can now invest in an FD without stepping outside your home.
These FDs are also safe as they are highly rated by credit rating organizations by ICRA and CRISIL for their stability and safety.
Fixed deposits are among the safest fixed income instruments and they also allow you to earn at a higher interest rate than savings accounts. However, the bank FD rates have been reduced due to repo rate cuts and other policies adopted by RBI to encourage borrowers to take loans. For ensuring high returns even then, you can invest in a tax saving FD or you can book a corporate FD like Bajaj Finance FD that offers interest rates up to 7.35%. The option of renewing an FD and choosing the option of cumulative FD is also available through which you can grow your savings steadily.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.