fixed deposits is one of the most popular choices of investment tools for those who are looking for a safe and secure investment plan. when it comes to investment, the percentage of return is directly proportional to the investment risk. while there are many investment options available in the market that promise higher returns, they also possess a higher level of risk which most investors are not comfortable with. but there are also several investment tools that offer guaranteed returns with almost zero-risk involved. fixed deposit investment is one such option.
financial planning is one of the most important parts of wealth creation. there is no doubt that finding the right investment tool for your goal is one of the most stressful parts of creating a financial plan. when it comes to selecting an investment plan, do your research thoroughly and try to find the right balance between return and risk. you can find a lot of information, guidance and tips on the internet that can help you make an informed decision.
everyone has different financial goals and hence the investment plan that you include in your portfolio should be based on your needs, wants and goals. however, there are a few financial tools that are essential for every portfolio. one such example is - fixed deposit (FD). though it’s a traditional investment option, it still stands as one of the smartest choices that needs to be included in your investment portfolio.
here are top five reasons that make fixed deposits one of the best and secure investment options for earning high returns.
#1. it’s a zero-risk investment tool
when compared with the share market or any other equity linked investment plan, you will find that fixed deposits are one of the safest investment tools for wealth creation. if you are someone who is just starting out with investment or someone who does not want to take high risk, low volatile fixed deposit schemes serve as a great way to ensure that your capital is risk-free.
#2. approved by financial experts
the ‘low-risk, high-return’ feature of fixed deposits is also approved by many financial rating agencies. the safety of the fixed deposit funds can also be analysed based on the ratings provided by rating agencies such as Crisil. as per the rating agencies, the FAAA security level is considered as the highest rating for financial instruments which means that payment of interest and principal is very secure. fixed deposit schemes having FAAA rating by Crisil are not only risk-free but also offer one of the highest FD interest rates in the market. it’s a great option to balance your investment portfolio without compromising on your returns.
#3. gives impressive return on investment
impressive return on investment is one of the key features of fixed deposit schemes. it’s one of the main reasons FDs have remained one of the popular investment tools for most people. over the period of time, there has been a significant rise in the FD interest rates offered by the banks and other financial institutions. there are some banks that offer guaranteed returns of more than 8 per cent per annum which makes FD a brilliant way to get impressive returns on your investment.
#4. power of compounding
the power of compounding can really help you multiply your wealth. you can turn small savings into bigger wealth with the power of compounding. you can select a fixed deposit tenure between 6 months to up to 10 years. in fixed deposit schemes, the compounded interest is reinvested with the principal amount which increases maturity corpus. those investors who do not need regular interest payment can choose ‘cumulative fixed deposit schemes’ where the interest is paid at the time of maturity in addition to the principal amount. hence, cumulative fixed deposit schemes are also known as money multiplier schemes. in case you need a monthly or quarterly source of income, you can choose to invest in a non-cumulative fixed deposit scheme where interest is payable at fixed frequencies.
#5. loan against FD
there are several additional benefits of having fixed deposits in your investment bucket list. there are some banks that offer facilities like - loan against fixed deposit that can provide an easier access to funds at the time of financial emergencies. there are many banks in the country that offer a loan facility of up to 75 percent of the fixed deposit amount available in the account. it will make sure your FD also has your back in case of any urgent emergencies.
with its key highlights such as - security, guarantee or impressive returns and benefits, fixed deposits fit all your investment needs. it’s an investment tool which is a must-have for all types of investors.
fixed deposits have a universal nature which is why it serves a different purpose for every type of investor. whether you are a high-risk investor, who just wants to multiply the invested capital, or some with a lower risk profile and want to have a sure and safe tool of generating more returns, fixed deposits are here to serve you.
don’t know how much to invest in a fixed deposit or want to calculate the returns? here is a simple FD calculator by CRED that would make your investment calculations much faster and easier.