A fixed deposit is an investment instrument that helps you increase your wealth and preserve your funds for the future. With recent updates to Section 80C of the Income Tax Act, senior citizens get more tax exemption on their income from bank FDs. This coupled with the low risk that FDs bear, give you a huge financial advantage.
- You receive safe and stable returns irrespective of market fluctuations
Fixed deposit is one investment option that offers stable returns irrespective of market fluctuations. You can choose a reliable company fixed deposit based on its safety rating. It is always good to go for an AAA rated FD so that your money remains safe. Multiply your funds safely and steadily with the Bajaj Finance Fixed Deposit. It has the highest safety rating by agencies like CIBIL and ICRA.
- You can access funds during times of need with a loan against your FD
There can numerous occasions when you need additional funds such as during medical emergencies or meeting urgent obligations. In such a case, you always have the provision to pledge an FD as collateral to receive a loan. A loan against your fixed deposit can easily help you finance a cash crunch, usually to the value of 60-70% of your FD.
- You get to choose your tenor and ladder investments for more liquidity
Not you can you start an FD with a minimal amount, you can also choose a tenor based on your needs. Usually, company FDs offer you the flexibility of starting an FD from 1 to 5 years, while bank FDs offer higher durations. Choose a short-term FD to get inflation-beating returns. Apart from that, since there is no limit on how many FDs you star, you can ladder your fixed deposit investments to coincide with various financial goals.
Thus, they will mature at different dates, and this way, you can also receive more tax benefits on your annual interest earnings. For example, you can ladder an amount of Rs.5 lakh into 3 FDs rather than investing the full amount in one. This enables you to access funds when you need them and also helps you prematurely withdraw one when you have the need while letting the others earn interest unencumbered.
- You can choose an FD type to suit your needs
There are two types of FDs that you can choose from: cumulative and non-cumulative FDs. If you seek monthly or periodic returns you can opt for non-cumulative FDs. However, if you seek better maturity you can opt for cumulative FDs.
Cumulative FDs provide you with the returns only after the lapse of the tenure, whereas the non-cumulative FDs give you pay-outs on a monthly, quarterly or semi-annual basis. To finance your post-retirement expenses, perhaps, you can invest in a non-cumulative FD so that the returns mimic a monthly salary.
- You get more tax benefits on an FD as per the 2018
According to the latest Budget, senior citizens now get more deductions on FD interest earnings. Earlier interests were tax-free only up to Rs. 10,000. This limit has now been raised to Rs. 50,000. For company FDs, the returns are tax-free up to Rs. 5,000 a year.
These are some benefits that an FD can offer you if you invest in the current financial year. Be sure to research well and compare various rates of interest before finally starting your investment. Since your returns are fixed, you can calculate your gains in advance to aid in financial planning.
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