Building Wealth With Fixed Deposits: The Long-term Strategy

Fixed Deposits (FDs) are one of the most popular investment options for risk-averse investors. They offer guaranteed returns at a fixed rate of interest and are low-risk investments. FDs are also easy to manage and offer liquidity, making them a suitable option for long-term wealth creation. In this article, we will discuss why investing in fixed deposits is an excellent option for long-term wealth creation.

What is a Fixed Deposit?

A fixed deposit is a type of investment offered by banks and financial institutions where an investor deposits an amount of money for a fixed period, at a predetermined rate of interest. The interest rate on fixed deposits is higher compared to a savings account, and the investment is considered low risk. After the fixed deposit term ends, the investor can either withdraw the amount or renew the deposit.

Why Invest in Fixed Deposits?

Guaranteed Returns:

Fixed deposits offer guaranteed returns at a fixed rate of interest. The interest rate on fixed deposits is predetermined and remains the same throughout the investment tenure, offering investors a stable and predictable return on investment.

Low-Risk Investment:

Fixed deposits are considered low-risk investments as they offer a guaranteed return on their investment. The principal amount invested is also relatively safe as it is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs. 5 lakh.

Easy to Manage:

Fixed deposits are easy to manage, and investors can invest in them without much hassle. Investors can also manage their fixed deposits online, making it easy to keep track of their investments.

Liquidity:

Fixed deposits offer liquidity as investors can withdraw their investments at any time, subject to a penalty for premature withdrawals. In case of any financial emergencies, liquidating the deposit can be a quick and easy source of funds.

Long-term Wealth Creation:

Fixed deposits are an excellent option for long-term wealth creation. They offer stable returns on investment and are low risk, making them an ideal investment option for investors who are looking for a safe and reliable way to grow their wealth.

How to Invest in Fixed Deposits?

Investing in fixed deposits is a straightforward process. Investors can choose to invest in fixed deposits through banks or financial institutions. The process of investing in fixed deposits is as follows:

Choose a Bank:

Investors need to choose a bank or financial institution that offers fixed deposits with attractive interest rates and flexible tenure.

Open a Fixed Deposit Account:

Investors need to open a fixed deposit account with the bank or financial institution, providing the necessary documents, such as identity proof, address proof, and PAN card.

Choose the Investment Amount and Tenure:

Investors need to choose the investment amount and the duration for which they want to invest in the fixed deposit.

Choose the Interest Payout Option:

Investors need to choose the interest payout option, i.e., whether they want to receive the interest amount at the time of maturity or on a regular basis, say, quarterly, half-yearly, or yearly.

Monitor the Investment:

Investors need to monitor their fixed deposit investments and review the interest rates periodically. They can choose to renew their fixed deposit at the end of the tenure or withdraw the amount to invest in other investment options.

Tips to Consider While Investing in Fixed Deposits

Compare Interest Rates:

Investors need to compare interest rates offered by different banks and financial institutions and choose the one that provides the most attractive rate of interest.

Taxation:

Fixed deposits are subject to taxation. Investors need to keep in mind the tax implications while investing in fixed deposits.

Premature Withdrawal Penalty:

Investors need to keep in mind the penalty for premature withdrawal of fixed deposits while investing. Some banks and financial institutions charge a penalty for premature withdrawal of fixed deposits.

Tenure:

Investors need to choose the tenure of the fixed deposit wisely. Longer tenures usually offer higher interest rates, while shorter tenures offer lower interest rates.

Best Fixed Deposit Apps in India

Bajaj Finserv App

The Bajaj Finserv App is one of the best mobile applications for investing in fixed deposits. The app is user-friendly, easy to navigate, and offers a wide variety of investment options to choose from. Customers can open an FD account in just a few minutes, monitor their investments, and track their earnings. The app provides real-time updates and alerts, keeping customers informed about their investments. The app also offers exciting features such as flexible tenures, attractive interest rates, and an option to withdraw prematurely. With seamless integration with the investors’ bank account, you can easily invest, manage your investments, and get updates on the go.

2. ICICI iMobile

ICICI iMobile is a popular mobile application that enables customers to invest in fixed deposits. The app supports a wide range of investment options and provides a variety of investment-related features. Customers can open FD accounts, manage their investments, and monitor their earnings. The app also offers real-time updates, alerts, and investment-related news. Additionally, the app offers exciting features such as flexible tenures, attractive interest rates, and the option to withdraw prematurely.

3. HDFC Mobile Banking App

The HDFC Mobile Banking App is a leading mobile application for investing in fixed deposits. The app provides an easy-to-use interface, enabling customers to invest in fixed deposits, check FD rates, and monitor their investments. The app is also user-friendly, and customers can access their investment dashboard with just a few clicks. The app enables customers to choose from various plans and tenures, and also provides flexible interest payment options such as cumulative, monthly, quarterly, and semi-annual.

4. SBI Anywhere Personal

State Bank of India’s Anywhere Personal app is a popular mobile application that enables customers to invest in fixed deposits. The app offers a wide range of investment options and many investment-related features. Customers can open FD accounts, monitor their investments, and track their progress. The app also offers real-time updates and alerts, keeping customers informed about their investments.

5. Axis Mobile

Axis Mobile is a popular mobile application that enables customers to invest in fixed deposits. The app is user-friendly and provides an easy-to-use interface, which makes it easy for customers to invest and keep track of their investments. Customers can choose from various plan options and tenures and monitor their earnings. The app offers an attractive interest rate and provides flexible interest payment options.

Conclusion

Fixed deposits are an excellent investment option for long-term wealth creation. They offer guaranteed returns at a fixed rate of interest, are low-risk investments, and are easy to manage. Investors need to compare interest rates offered by different banks and financial institutions and choose the one that provides the best rate of interest. They also need to keep in mind the tax implications and the penalty charged for premature withdrawals before investing. Fixed deposits are a safe, reliable, and easy way of growing wealth overall.