Fixed deposit rate – If you are planning to take a fixed deposit ie. FD, you need to know a few things
before you invest any money. If you invest in the smart investor's way, you will not only earn more
interest, but you will also get many other benefits.
Due to features such as favorable interest rates, low risk of money sinking, and withdrawals whenever you want, fixed deposit is a preferred investment tool by investors. If you invest in FD wisely by understanding the banking rules properly, then not only will you get more returns (FD return) but the chance of sinking your money will also be zero. Even if the bank fails, you will get your cake back. Some savvy investors use these three strategies to enjoy more interest and liquidity than others.
Not that the bank has given them anything separate. They just change the way you invest in FD. They take due advantage of the rules made by the Reserve Bank and make risk-free investments. If you also adopt these three smart methods while investing your money in FD, you will also reap many benefits.
Don’t invest any money in FD
You don’t have to invest all your money in just one FD. Divide the amount you want to invest in the FD. Instead of investing all your money in a fixed amount that lasts the same amount of time, divide the money into three tranches. Invest your money in a variety of short-term deposits.
Do FD in different banks
There are also differences in banks’ FD interest rates. Smaller banks tend to pay more interest than bigger banks. So instead of getting FD from one bank, you should get FD from different banks. You can get an FD for a small fee from a small bank. One advantage of having an FD with multiple banks is that if one bank fails, you don’t lose all your money.
Guaranteed money of Rupees Five lakh is available on bank deposits. This guarantee is provided by the Deposit and Credit Guarantee Corporation (DICGC), a subsidiary of RBI. You will get back only Rupees Five Lakh. If you have accounts in several branches of the same bank and the amount deposited in them is more than five lakhs, even then only five lakhs of rupees will be refunded to you. So you can secure your money by having FD in different banks.
Focus on the duration
You don’t invest your money in FD. FD accounts were also opened in several banks. But if you make it by mistake, you would not achieve the full benefit. Especially interest and liquidity. This does not diversify the FD holding. You have to invest your money in FD of different terms with different banks. If you invest in 1-year, 3-year, and 5-year fixed-term deposits, you will earn more interest and the money will also come to you at regular intervals.
There are differences in interest rates for FDs of different terms. By setting up an FD like this, you will need your money in three ways and it will be more than the interest you will earn by investing in the FD for the same period. If we invest in multi-holding FDs, then one or the other of our FDs will continue to mature at shorter intervals.
Because of this, we will not face any shortage of funds. Also, if we need money suddenly, we can withdraw from an FD in between. Because our entire fund is invested in different trenches, the loss from early withdrawal is minimal.
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