Investing in Fixed Deposit Scheme? Find Out the Right Ones For You

byNikita AggarwalLast Updated: July 10, 2023
Investing in Fixed Deposit Scheme

FD (fixed deposit) schemes are offered by several banks to help an investor earn a fixed income on a monthly basis. Offering a security net against market volatility, FD schemes are a safe and convenient way to see your savings grow. While selecting which FD scheme to invest in, one must keep certain factors in mind. Continue reading this article to know more about FD benefits, best fixed deposit schemes for you and the factors to consider before making an investment. 

Benefits of Fixed Deposit Schemes

Following are some of the major benefits of fixed deposit schemes:

  1. Assured returns – Irrespective of economic ups and downs, investors will receive a fixed return on their investments.
  2. Safe investment – When the investment tenure ends, it is a guarantee that investors will receive the invested amount along with the accumulated interest.
  3. Flexible payouts – Investors are free to choose a tenure that suits their specific needs. Every bank has different policies, but flexi schemes allow investors to withdraw money before maturity. 
  4. Grow savings – Investors can also earn interest on the interest amount and grow their savings faster.
  5. Higher returns for senior citizens – FD schemes are specially designed for senior citizens as they allow them to earn more from their savings and live a stress-free retired life.
  6. Quick and seamless process – FD schemes can be opened online in just a few minutes. If investors want to open an FD account with the bank where they are already a customer, then they simply need to log in with their net or mobile banking passwords and apply for the preferred FD scheme. It also requires minimum documentation and is completely hassle-free.

Must Read – Short Term FD Vs Long Term FD

Best Fixed Deposit Schemes 

Various banks offer fixed deposit schemes at different rates of interest. There are two major categories, one is cumulative deposit, in which the interest is paid along with the principal amount after maturity. And, the other one is a non-cumulative deposit, in which the interest is paid regularly. Let us go through the features of some of the best FD scheme types available:

Standard fixed deposit schemes: 

  • There is a fixed tenure for which the money is deposited, ranging from 7 days to 10 years.
  • The bank pre-determines the rate of interest.
  • Interest rates are usually higher than what customers receive from a savings account.

Tax saving fixed deposit schemes

  • They allow a tax exemption of up to Rs 1.5 lakh in a year. 
  • The tenure of these FD schemes is 5 years and you are not allowed to withdraw the amount before that. 
  • A single lump sum deposit is allowed. 
  • The interest rate offered by most banks ranges between 6.25% and 7.50%.

Special fixed deposit schemes:

The investment is made for a specific period of time. However, if you don’t withdraw the money for the specified period, then you will earn higher interest than standard FD schemes.

Regular income fixed deposit schemes:

If you have a limited income and the interest you receive on the bank deposits have to be utilised for your monthly expenses, then you may choose to invest in this scheme. You can choose payout options such as a monthly or quarterly interest option.

Senior citizen fixed deposit schemes:

  • People aged over 60 years can open this FD account and avail its benefits, including-
  • Depending on the bank, interest rates provided are higher by 0.25% to 0.50%.
  • There is a flexible tenure of maturity. 

Must Read – Why Senior Citizens Should Consider Investing in Fixed Deposits?

Flexi fixed deposit schemes:

You can activate an FD scheme by making an initial deposit and linking it to your savings account. You can also set a limit in your savings account and any excess amount will be transferred to the FD scheme.

Corporate and other fixed deposit schemes:

Under such schemes, an investor can deposit money with top companies for a fixed period of time, with a rate of interest ranging from 7.25% to 8.60% per annum. Financial institutions and non-banking financial companies (NBFCs) also offer this type of FD. The interest rate for general citizens ranges between 7.25% and 8.18% per annum, and for senior citizens, it ranges from 7.50% to 8.68%  per annum. Always check the credit ratings of the company before investing.

Factors you must consider before choosing fixed deposit schemes

Here are a few things you should take note of before investing in fixed deposits and deciding which bank is the most suitable choice for you:

  • Deposit limit – Start by considering the deposit limit which means the maximum amount a bank can offer in a FD. 
  • Interest rate – The interest rate for FD schemes varies from bank to bank. Check their rates before making an investment choice.
  • Liquidity – You must invest in fixed deposits after assessing how quickly your money will be available when needed.
  • Tax benefits – If you are looking for a tax deduction on your earnings, investing in an FD scheme is a good option. 
  • Tenure – Before investing in the best fixed deposit scheme, you must check the tenure to learn how long your money will be kept in the bank.

Must Read – How to Open a Fixed Deposit Account Online?

Fixed deposit schemes are safe investments. But, one must always plan such investments only after analysing different schemes available. You can also use a fixed deposit calculator to help decide your long-term financial goals and select a suitable scheme to make investments according to your affordability. Review your investment strategy on a regular basis and stay. 

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