It’s that time of year again when we review our financial portfolio. We examine strategies to restructure our investments and diversify the portfolio to get higher returns. However, to do successful financial planning, you must first identify your investment needs and goals. Many financial instruments available today offer high yields, but the risk element connected with such assets is also considerable. Among the financial instruments that are safe, provide high returns, and are unaffected by fluctuating interest rates is a fixed deposit.
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Fd or fixed deposits have been in investors portfolios for a long. Not only does the investor gets guaranteed returns, but also the risk factor is minimal. Moreover, you can easily calculate your returns on investment using a fixed deposit interest calculator. Let’s look at some of the factors that make FDs a significant asset in your portfolio.
Why Should You Have a Fixed Deposit in Your Investment Portfolio?
Let us look at some of the reasons why FDs are one of the preferred investment options for getting high returns.
- FDs are a Safe Asset
Fixed deposit must account for a portion of your portfolio’s assets. Compared to equities or other market-linked products, they are the safest investment options. FDs adds stability to the portfolio as the risk is low, and the returns are assured.
- Fixed Returns to Help You Achieve Your Life Goals
Fixed-income securities (FDs) provide guaranteed returns at maturity. Furthermore, you may easily calculate the maturity amount using an FD interest rates calculator and use the money as appropriate. Fd returns do not fluctuate as per market volatility, making them a dependable asset.
- Option Between Cumulative and Non-cumulative FDs
As an investor, you have the option of investing in a cumulative or non-cumulative scheme. Non-cumulative FDs are an option if you are dependent on FD interest rates to make a living. Returns are delivered to you on a monthly or quarterly basis in this case. For others, a cumulative scheme allows a total payout at maturity time. Moreover, with cumulative FDs, the returns are higher due to the power of compounding. Using an FD rate calculator, you can efficiently compute the maturity value based on the interest rate and the tenure.
- Easy Access to Credit
Fds can also be utilized as collateral in the event of an emergency fund necessity. Again, these are secured loans with low-interest rates for borrowers.
- Tax Savings FD
Tax savings FDs are an excellent option to save taxes while also getting predictable earnings with little risk. For deposits of up to Rs 1.5 lakh, you can claim FD Income Tax Exemption under Section 80 C of the IT Act.
- Premature Withdrawal
Premature withdrawal is also available with FDs. In the event of an emergency, you are allowed to cancel your fixed deposits before their term matures. The procedure for withdrawing the FD prematurely is simple. However, you will be charged premature withdrawal fees.
The unique features of FDs listed above make them an excellent asset to any investor’s portfolio. The assured returns with fixed tenure and zero risk make them a dependable financial instrument. The best thing is to quickly calculate the maturity amount utilizing an FD interest calculator based on the term and interest rate offered.
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