Safety is always the most important aspect of any investments. Those who invest money for returns need security on their capital as well as assurance of handsome returns.
This has led banks and Non-Banking Financial Companies (or NBFCs) to devise various types of Fixed Deposit schemes. These are regulated by rules from the apex bank, the Reserve Bank of India.
Why You Should Invest in an FD
Banks and notable NBFCs like Bajaj Finserv have launched various Fixed Deposit schemes in India. Before you decide to invest in one of them, you must analyse your options.
First of all, you will have to check your motivation to invest, and your individual financial goals. Are you looking to save on taxes? Are you willing to facilitate regular flow of income? Are you trying to save on taxes, or earn a lump sum interest? These questions will help you determine the type of Fixed Deposit scheme in India you should invest in.
The Different Types of Fixed Deposit Scheme in India
Once you have determined your needs and preferences, your next step should be finding out how various Fixed Deposit schemes in India work. Some of the most common Fixed Deposit schemes include:
Standard Fixed Deposit: This is the most common type of Fixed Deposit scheme in India. Here you will have to deposit a certain amount of money for a fixed tenure. You can earn the specified rate of interest on your deposited principal amount.
This is the most popular scheme in this country. The interest you earn on this Fixed Deposit scheme for the long term is higher than the interest on savings bank accounts.
In order to receive the promised value at the time of maturity, you should leave the deposit untouched for the agreed time period. In case of an emergency, you may break the Fixed Deposit. However, you are likely to incur a penalty of 0.5 to 1.0 percent in the rate of interest.
You can deposit your hard-earned money with a company that offers a high rate of interest. For instance, Bajaj Finserv lets you deposit from Rs.50,000 to Rs.5 crore for 12 to 60 months.
Flexi Fixed Deposit: In this Fixed Deposit scheme, your deposit is linked to the savings bank account. Money can move between the deposit and the savings account. This is an immensely convenient scheme for all those who make regular transactions. You may deposit any amount of money to earn high interest. Here’s an advantage: you can take out a percentage of this deposit to manage your expenses, without incurring any losses.
You will earn high interest rates on Fixed Deposit account. With the flexi Fixed Deposit, you can take care of your expenses and earn a high interest as well.
Tax Saving Fixed Deposit: This is yet another type of Fixed Deposit scheme in India. Here, you can enjoy a tax deduction of Rs.1,50,000 each year under the Section 80C of the Income Tax Act. But this is a Fixed Deposit scheme for long term where you will have to keep your money intact for 5 years.
You cannot break the deposit before its maturity, or request for loans on the basis of this deposit, or avail the overdraft facility. The interest that you gain from this Fixed Deposit is taxable under the income tax slab applicable to you.
These are the three most popular variants of Fixed Deposit scheme for long term in India. You can invest in any of these, according to your financial goals and personal preferences.