When you are planning to invest your funds in safe and high-yielding options, you may surely come across term deposits. Term deposits or fixed deposits can be simply described as investing a fixed sum of money that yields interest over a fixed tenor.
In this investment, you need to wait until your corpus matures to access the money you have invested as well as your interest earnings. The primary feature of this investment option is that it does not permit premature withdrawals. However, going for this option comes with a good amount of benefits. Have a look at some of the benefits listed below.
1. It offers guaranteed interest gains
This option offers assured returns, regardless of the market or any other factors. It offers you higher returns than your regular savings account and allows you to build a corpus of wealth over time. This will help you gain from a better sum on maturity that can then be used to fund a series of financial requirements including retirement.
2. It is a safe option as it is free from market-influence
Your investment in a term deposit is completely independent of market fluctuations and adversities. This means that regardless of the scenario of the economy, equity and commodity market you will always receive the promised sum on maturity inclusive of your principal investment.
This also eliminates the hassle of losing money owing to sudden monetary policy changes. This feature makes term deposits ideal for you if you are a risk-averse investor who wants safety.
3. It is good for long term investments
When you invest in a term deposit, the tenor plays a big role. This is because term deposits come with a fixed tenor. Even though you add funds to your deposit on a monthly basis, you are not allowed to withdraw funds as per your needs from the same account. You can access your term deposit only on maturity, and until then your funds are locked in.
4. It enables you to avail a loan against it
You can pledge a high-value term deposit as collateral to avail a secured loan. Pledging this investment allows you to get a high-value sanction on competitive interest rates that you can then use to fund a series of personal and professional goals such as a family wedding, your child’s education, and can even renovations at home.
Hence, you can benefit from receiving quick funds on low interest on owing to your deposit and still keep it in safekeeping so that your investment keeps earning interest until it reaches maturity.
Some term deposits offer you interest payouts at regular frequencies and are called non-cumulative FDs while others only offer earnings at maturity. So, make a wise choice between the two. You can choose issuers like Bajaj Finance to gain higher returns of up to 8.75% on your Fixed Deposit.
This interest also qualifies as one of the highest offerings by any financial institution in India. The security of this FD is very high, as Bajaj Finance has also been awarded ICRA’s MAAA (Stable) Rating and CRISIL’s FAAA/Stable Rating. Also, you can use the FD calculator to calculate your returns in advance based on the interest rate and tenor and accordingly decide the exact amount for investment for yourself.