A savings account is a basic bank account where you can invest money, and it helps you save for the future. And a fixed deposit account secures your money in real time. First, you must learn useful facts about savings and fixed deposit accounts. A savings account is a safe option, and there won’t be unauthorized access to your hard-earned money. A savings account helps you get quarterly interest, and it’s easy to open a savings account.
On the other hand, fixed deposits fulfil your long-term financial goals. It’s important to consider the fixed deposit account’s tenure before investing. Certain financial organisations turn out with a corporate FD, and it’s the best way to generate funds to enhance business opportunities. Company fixed deposits offer higher interest rates, which can be a better option.
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Importance of Fixed Deposits
Here is a detailed comparison of fixed deposits and savings accounts:
Higher Interest Rate
Fixed deposits have higher interest rates than savings accounts. The fixed deposit interest rate is usually between 4.5-8.5%, and non-banking financial institutions help you get higher interest rates. So, investors planning to generate a good source of income after retirement can consider investing in fixed deposits.
Benefits for Senior Citizens
Certain fixed deposit schemes come up with added benefits for senior citizens. Senior citizens’ fixed deposit schemes have higher interest rates than the basic schemes, and thus investing in fixed deposits post-retirement is a good decision. On the other hand, savings accounts come up with a standard interest rate for every citizen, and there are no benefits for senior citizens.
Ultimate Flexibility
A fixed deposit account brings ultimate flexibility. However, there are different tenures, like investing for 5 years, 7 years, or 10 years. Different organisations have multiple options, and you must choose the ideal one. Consider different aspects while choosing tenure; it helps you avoid premature withdrawal.
Free From Risks
Investing in fixed deposits is risk-free, and you will keep receiving the interest periodically. Thus, it’s the best option for senior citizens who want to avoid unexpected losses due to market changes. Moreover, it’s a safe option, and you will enjoy benefits in real time.
Receive Interests Periodically
Fixed deposits help you receive interest periodically. Thus, it becomes easy to manage your expenses and helps people live better lives after retirement. In addition, fixed deposits are a source of monthly income for retired people and thus help you overcome the monetary crisis. You may choose monthly, quarterly, or annual interest payouts depending on your needs.
Fixed Tenure
Fixed deposits have a fixed tenure, while savings accounts have no fixed tenure. You will find different tenures, and it’s important to find the feasible option. And it’s good to consult the NBFC’s representative, who will help you find the best option.
Loan Facility
Fixed deposit accounts help you apply for a loan in an emergency. FD acts as collateral, and getting loan approval is easy. And a loan against your FD has a low-interest rate, and you can easily repay the whole amount. And even you will find the option to repay the whole amount in instalments. On the other hand, savings accounts won’t provide such facilities, and thus it’s good to invest and get the highest fixed deposits interest rate.
Tax Benefits
Investing in fixed deposits also helps you enjoy tax benefits. A 5-year tax saving FD helps you get rid of the financial burden. And you will get an idea of why fixed deposits are better than savings accounts. A savings account provides benefits on interest-only; thus, it’s good to choose fixed deposits over a savings account.
Once you get a clear idea of the benefits of fixed deposits, you will feel confident to invest. It’s good to learn the terms and conditions before you invest, which enables you to generate higher profits.
Things to Consider While Investing in FD
Here are a few things you must consider while investing in FD:
- Consider the returns and inflation before you invest. You may use an online interest rate calculator that helps you calculate the returns.
- Next, you need the minimum account balance required to open an FD account. Organizations have varied options, and it’s important to learn accurate information.
- Knowing whether you need any penalty if you choose a pre-mature withdrawal is important. Thus, you must read the terms and conditions to know the procedure for pre-mature withdrawal.
Also, there are different schemes, and you must learn how the scheme will bring notable benefits. It helps you invest confidently, and you will learn how it generates higher returns. Bajaj Finserv makes it easy to open an FD, and you can win good financial benefits.
