Over the years, fixed deposits have consistently delivered high returns to investors. It is regarded as one of the safest investment instruments. In a fixed deposit, you can invest some amount of money for a fixed interest rate and predetermined tenure.
Fixed deposits offer a guaranteed rate of interest returns on the deposited amount. There are several ways you can earn more profit by investing in a fixed deposit. Let’s find out how you can make more on your FD investment .
Ways to earn a higher interest rate on your FD investment.
1)Do your homework properly
Interest rates on FD may vary from one bank to bank. Whether you want to make an FD online or offline, it is essential to check the percentage of interest beforehand to get a Highest Interest rates on FD investment plan. Consider your future financial goals before choosing the tenure of your FD. People also find it beneficial to make an FD account from a Non-Banking Finance Company or NBFC as they offer a higher rate of interest. Also, make sure to note that the essential key point in mind like avoid making a premature withdrawal. Also, investing in a Short term fd can be beneficial to beat inflation. Moreover, after a certain period, you can also reinvest in the same fd. This will help to a higher interest rate.
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2)Take a loan against your FD
Fixed deposits are profit yielding and safe. When you are putting a part of your savings in an FD, then you should always be prepared for future emergencies. If you break your FD before maturity, then you not only lose out on interest rate but also have to pay the penalty fees. You also get an option to take a loan against your FD while making a fixed deposit. Hence, you won’t have to break your FD in case of an emergency. In this way, you can take a loan against your FD. The loan you choose against an FD comes with low-interest rates and for tenure as long as your FD. We can earn through a Fixed Deposit not only in the form of the interest rate. The best way to grow your fixed deposit is by reinvesting the total sum again and again. Make sure you research well and choose the right financier.
3)Choose an FD interest payment tenure
You get two types of interest payout system – non-cumulative and cumulative. In a cumulative fixed deposit, you get your whole interest amount when the FD tenure ends. Whereas, you get a flexible interest rate payouts in a non-cumulative FD, which you can get yearly, mid-quarterly, or quarterly. However, there is a significant drawback of non-cumulative FD. That is, you won’t get compound interest after some time. If you want a compound interest rate, then it is best to opt for a cumulative fixed deposit.
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4)Try to diversify your investments
Instead of investing in just one fixed deposit, make two or three different FDs. Then you don’t have to take out the whole amount during an emergency. On the other hand, you will have another FD, which will continue to grow with interests.
You have invested in a bank FD, so it does not block you from investing in other investment options. Depending on your risk-taking capacity, you can also spend your money on other investment options like mutual funds, bonds, shares, etc.
Investing in multiple numbers of funds can turn out to be very advantageous. With different funds, there will be assured interest rates earned from each fund.
Secondly, Diversification is always considered to be a safe option. There is less risk involved.Also, this can have a positive impact by lowering the tax proportion.
In total, it is considered to be a very flexible option, and you have got the opportunity to earn assured returns.
Fixed deposits are popularly known as the safest investment options in India. But everyone does not know how to make the most out of their investment. Fixed deposits offer higher interest rates in comparison to some other investment options.
Besides, the interest rate is fixed, so no matter how the market condition is, you will get guaranteed returns. However, one can manage their fixed deposit tactfully to get better returns. The points mentioned above may help you to manage your fixed deposit account to earn more profit from it.