Savings accounts and fixed deposits are traditional investment options that still see a lot of traction? Why are they sought after? Let’s find out.
When it comes to investments, every person wishes for zero risk and high returns.
Let us establish at the outset that a zero-risk investment does not exist, particularly when you speculate on the markets. But despite the ups and downs in the markets, there are certain investment options that continue to show high levels of security as well as guaranteed returns. They are traditional options that have been trusted over the decades – to great results.
These options are savings accounts (including senior citizens savings accounts, which are a relatively new phenomenon) and fixed deposits.
Savings accounts…
- Savings accounts are necessary to keep your savings and income safe. They are a convenient repository with your bank.
- The bank pays a quarterly savings account interest on the deposit. Naturally, the more money there is in the account, the more it earns by way of savings bank account interest.
- You can create a sizeable savings corpus for yourself by saving money from your income every month and depositing it in your saving account.
- Leading banks also offer senior citizens savings accounts. These normally have the same quarterly interest pay-out as other accounts, but there are other benefits like easier application and net banking processes, preferential treatment at the bank branch, regular updates on new products for senior citizens, etc.
Fixed deposits…
- Fixed deposits are a lump sum amount of money deposited with the bank, for a certain term of time and at a fixed rate of interest.
- It is the go-to investment option for several generations of Indians. Even today, most people repose their faith in fixed deposits when they want a fail-safe, guaranteed investment option.
- The FD account pays the same interest throughout its tenure, despite rate fluctuations in the market. Since the deposit remains insulated from rate fluctuations, it shows guaranteed and predictable returns on your money.
- The FD account is the best instrument for those who want safe options for their money. It also shows a propensity for high growth despite tumult in the market, which is not seen with other options like mutual funds, for example.
- The deposits in the senior citizens savings account may be diverted to the FD account for higher growth. The FD shows higher interest rates than the savings account.
- Since you can choose the tenure of the deposit (in terms of days, months and years) you can time the deposit maturity to coincide with a future milestone, such as children’s higher education/wedding, making a down payment on a second home, refurbishing the house, etc.