Ever heard your parents say something about a fixed deposit or even a grandparent, perhaps? Well, yes, that is how long fixed deposits have been around. We all know that FDs have somehow turned out to be one of the most popular forms of saving. We might not know a lot of schemes or offers out in the market to invest and save, even though there is a lot of them. But we all know about FDs for sure. Like normal people who earn, the first thing that comes to our mind is safe storage space, and that is what this scheme gives us. But what if it were securing your lump sum with a certain amount of interest and growth on it. Is it a double tick to something better?
Well, though FDs are this famous and popular, you often miss out on something. There are various features to it and do you really know if you have invested in the right FD if its features do not match your needs. So, before you start investing in an FD, here is a checklist for you. Make sure you’ve crossed out every box on this list to invest in an FD that suits you the most.
1) How Safe is It?
On a scale of 1 to 10, how much would you rate the safety of the FD instrument? Make sure it is always a 10. Safety is a far related topic for the twenty-first century, as banks are highly secure. But still, why do you want to take the risks? Make sure you know the reputation of the bank, and even the slightest bad vibe should put you off. Remember, you are investing your hard-earned money into this account, and you do not want to even have the tiniest chance of losing it.
2) What is the Minimum Deposit?
You mostly already have a budget in your mind – on how much you want to invest. But what if the bank has different ideas. Different companies and banks have varied minimum and maximum bars. It is necessary for you to make the correct checks before you can start planning or dreaming about a certain interest rate.
3) Time Period
Most of them offer deposits of a year to 10 years. Are you willing to lock your money in for 10 years, or do you need that money next month? Let us just say, you have Rs.25,000 meant for a trip in the year 2023, and for the year 2022, you decide to invest it instead of just letting it sit around. Now you can just invest it for a year or six months. So you need to choose a bank that will allow you to invest for six months or a year. With that, you would not have any problem investing.
4) Interest Rates
Well, you already know this, and this is probably the first thing you think about. Make sure you have complete research on the right FD interest rates. Interest rates and their returns can take your financial goals and profits a long way. FDs give you interest every year, every month, every quarter, and the time horizon can keep going. Make sure you know what you want and when you want these amounts deposited.
No one can predict the future, which means uncertainty. So, just in case you want to back up your FD to have it reach the right set of hands at all times, you need to enter your nominee. The bank you choose must be able to give you the facility of nomination.
6) Tax Deduction
Now, you know that when it comes to FDs, the interest is taxable. So if you make an interest over Rs. 10,000 for a year, it is taxable. Make sure you are aware of the tax benefits and how the bank deduct the tax.
7) Senior Citizen Advantage
So if you are one or applying for someone who is one, you know that senior citizens get higher interest than the rest of the customers. If you did not know, you just found out. Make sure you utilize this opportunity and use it to its fullest.
8) Date of the Maturity
Remember, the money will only mature on a particular date. If you are saving this piece of money for a birthday or a wedding, you might want to check the date of maturity on the receipt. You do not want to be celebrating the birthday a week after it is actually over.
9) Premature Withdrawal
Well, uncertain things and unrealized circumstances are a part and parcel of everything in life, which means anything could happen at any time. Just for that instance, you need some money and it is locked up in your FD. You can quickly take it out and use it if it has the option of a premature withdrawal. So make sure you ask your bank if they have a premature withdrawal.
10) Penalty on Premature Withdrawal
If there is premature withdrawal, you might want to know more about it, like the penalty. You would typically have to pay a penalty if you withdraw your money before it matures.
These things are easy to find out when it comes to investing in an FD. It might not be the right thing to just blindly fall into choosing a random FD. It is okay to take time and choose an FD that has all of the above-mentioned features.