Investing in a fixed deposit is a great way to secure your savings as it provides substantial interest along with the safety of your invested money. To guarantee better returns, financiers offer attractive interest rates on their FD schemes. Therefore, you should ideally pick an FD plan that offers a high interest rate.
Bank FD rates are at an all-time low and therefore, FDs might not seem to be a lucrative option to investors. However, you don’t have to worry about the falling FD rates as there are many other options to ensure that you receive higher returns post FD maturity.
Let’s discuss some of these options now:
Re-invest your returns
If the interest rate of an FD does not match your expectations then you can also re-invest its returns in same or another FD. Many banks and finance companies allow depositors to reinvest their returns. By reinvesting, the interest that you have earned through the earlier deposit will grow further and this will compound your returns over time.
Also, this option proves to be useful if you don’t have ample time to check and strategize your investments as you can simply choose the option of FD auto-renewal while submitting the online FD form.
Invest in multiple FDs
If you want to use fixed deposits as a financial backup then it is better to invest in multiple FDs. This method is known as laddering of deposits and it allows you to split your funds smartly in FDs of varying tenors and types.
By investing a part of your savings in a non-cumulative FD you can earn a regular income to manage your expenses. The other half can be invested in a non-cumulative FD to fulfil your long term financial goals.
Moreover, you can withdraw one of your deposits to cover an unprecedented financial requirement. Also, as you get more liquidity points in a calendar year, you might get an opportunity to invest in a high paying FD in the future.
By laddering deposits, you will also get tax benefits to some extent as your deposits will mature on different dates.
Comparing FD rates
A fixed deposit interest rate calculator is available on the official portal of almost all financiers and you can use it to check the interest rates offered by the financiers individually. By comparing FD rates offered by multiple financiers, you will get an idea about the best FD rate in the market.
You can invest in a corporate FD that provides much better interest rates than bank FDs. Bajaj Finance FD is providing an interest rate of 6.85% which is one of the highest fixed deposit interest rates in India. An FD calculator is provided on its portal as well and you can utilize it to explore FD rates as per your tenor requirements and customer category.
You will also be able to calculate the FD returns with this calculator and since it shows the returns of both FD types (cumulative and non-cumulative) for the same tenor and amount, it might help you to plan your finances as well.
Bajaj Finance FD has received MAAA/stable ratings from ICRA and FAAA/stable ratings from CRISIL which are the highest credit ratings offered by these respective credit rating organizations.
Also, a 0.10% extra FD interest rate is provided on choosing the online FD account opening procedure and 0.25% additional FD rate offered to senior citizens will help to gain a higher interest at maturity. The multi-deposit facility from Bajaj Finance enables you to invest in several FDs at once with a single cheque, thereby helping you to ladder your deposits conveniently.
Confused about where to invest money
If you are then you can think of investing in a fixed deposit plan that provides a good interest rate and ensures the security of the invested amount. However, as bank rates are not as high as before, you might have to ponder on other options to get better returns at maturity. One of the best options would be to ladder your deposits as it gives you several liquidity points that can be utilized to invest in a high paying FD whenever you get a chance.
Reinvesting FD returns is also a good idea as it helps you to multiply your interest earnings over a period. Bajaj Finance FD is offering a 6.85% interest rate which is one of the best FD rates in 2020. Moreover, it also provides options like a multi-deposit facility that enables you to ladder deposits easily.