6 reasons why you should prefer term deposits
Sitting on the fence about investing in a term deposit and deciding on where to stash your hard earned savings can be a daunting process. It is worth comparing not just the interest rates, but also the type of fixed deposits available.
Contrary to popular belief, term deposits offer both short term and long term products, with good returns and minimal risk. Take a closer look at their benefits before you start investing.
1. Safe investment
Investing in fixed term deposits offers guaranteed return, so you will not have those sleepless nights thinking about your investments’ safety and returns. You can choose to invest a fixed amount monthly through recurring deposits as well.
2. Flexible interest rate pay-outs
While choosing your returns, you can either go with annual, monthly, or at-maturity options. This pay-out would ensure that you gain a periodic income and you have the opportunity to reinvest towards another financial goal.
Banks also offer flexible deposit options wherein you can add to your initial investment and grow your nest egg.
Some of the banks offer term deposits for a minimum tenure as low as 7 days and a minimum deposit of Rs.1000. So, you can account for liquidity when you choose the term of your investments.
4. Interest rate volatility
The fixed interest rate on a term deposit means that even if market interest rates are falling, your savings will keep earning the same level of interest.
5. Savings on income tax
Banks also offer tax saver deposits which are similar to fixed deposits except that they also offer deduction under section 80C. The maturity period for tax saver deposits is 5 years.
6. Higher returns for senior citizens
Senior citizens can take advantage of the higher interest rates offered by banks. The rate is also based on the amount invested and for the time invested.
Now that you are aware of the benefits, it is time you took a re-look at your saving habits and adjust your investment strategy.