Incredible Fixed Deposit Benefits - The advantage of guaranteed returns makes traditional time deposit investing an important part of every investor's portfolio. However, once considered a simple vanilla product, FD has changed its identity by becoming more fluid along with some other benefits.
Banks are now in the age of perfection. As a result, more and more attractive deals hit the market to attract more investors. Here are some of the benefits of term deposits.
Insurance - Most reputable banks and financial institutions in the country offer insurance facilities in addition to direct insurance contracts.
Insurance depends largely on the amount of the deposit and the period of holding the deposit.
For example, a bank offers free accident protection of Rs 40,000 on a 6-year deposit of Rs 30,000 at an annual interest rate of 8. Overall, this helps add value to the product.
• Floating rates and reinvestment - In most cases, term deposits are offered at a fixed rate for a fixed period of time. However, some banking and non-banking financial companies offer variable rate schemes.
For example, a company may offer variable rate deposits that pay interest at the beginning of each quarter. Not only that, some banks also help the investors by allowing them to reinvest the interest at the current interest rates.
For example, you receive interest of Rs 3,000 per quarter. The bank creates a new FD with that amount at the current interest rate.
No Penalties
Termination contracts are known to be fixed throughout their term. Once the maturity date has passed, the depositor can withdraw the funds. If a person withdraws money before the due date, he will be penalized.
In such cases, the total return will decrease. To stop this, some banks offer term deposits where the interest rate is not reduced if the FD breaks down before the holding period. For investors looking for flexibility, these deposits can be beneficial.
Fragile Deposits
Opening several small term deposits usually requires a great deal of paperwork. If an investor needs funds at different points in the future, he may choose a more flexible investment. This way he/she does not have to deposit a lump sum and then split the deposit.
Therefore, banks solve this problem by introducing products that divide lump sum deposits into smaller deposits. This allows us to meet the needs and requirements of our investors.
Flexible Tenure
In an emergency, the FD period may need to be extended. In such cases, some banks provide facilities that allow investors to extend the investment period without major changes in other conditions.
This is the most popular feature of term deposits in the market today.