5 Advantages of Having a Fixed Deposit Account in 2019

Saving money in cash or savings account is more about accumulating money rather than growing it. In today’s time where inflation is a considerable factor, the approach of saving money is not the best idea to go forward with. However, investing in the market, which is volatile by its very nature and carry a high amount of risk factor may not be the best idea, too if you do not have the big risk appetite. In such a scenario, one of the best options is to invest your money in a Fixed Deposit.

The rate of interest on fixed deposit is higher than a savings account, and besides, it also offers guaranteed returns. Thus, it becomes one financial instrument which offers a return to investors with zero risk factor.

Also, if you are a new investor, then the fixed deposit is one of the best instruments for your start your investment portfolio. In today’s time, both NBFCs and banks provide a fixed deposit. Let’s look at 5 advantages of having a Fixed Deposit account.

1. Flexibility:A fixed deposit account can be set up for 7 days to 10 years. It is up to your discretion as to how much time you want to place your money in a fixed deposit. It is not necessary to be an existing customer of the bank or NBFC in which you want to open the fixed deposit account. Also, choose the tenure of fixed deposit as per your requirements, you do not want to land up in the premature withdrawal trap.

2.  Risk-free:There are financial instruments which can give much more returns than fixed deposit like mutual funds, equity, gold ETFs, etc. However, these instruments are much riskier than fixed deposits as well. Especially when you are planning for long-term, fixed deposit is one of the best instruments.

3. Helps in Liability:Emergency situations can arise in someone’s life at any moment. In such situations, you can be presented with urgent cash requirements. For this, you can take a loan against your fixed deposit. Generally, up to 60%-90% of the fixed deposit’s value is provided as a loan.

4. Assured Returns: Fixed deposits provide assured returns. However, the rate of return on your deposit depends upon the tenure you have selected and in which bank or NBFC you have opened your fixed deposit account. As per general observation, the rates of NBFCs for fixed deposits are slightly higher than the rate of return on bank fixed deposits.

5. Rates: Here is a list of some banks and NBFCs along with their interest rate for the tenure of 1 year to under 2 years.

   • State Bank of India – 6.80% and 7.30% (senior citizens)

   • Bajaj Finserv – 8.00% and 8.35% (senior citizens)

   • Axis Bank – 7.20% and 7.85% (senior citizens)

   • ICICI Bank – 7.00% and 7.50% (senior citizens)

   • PNB – 6.75% and 7.25% (senior citizens)

Considering these 5 advantages of fixed deposit in 2019, it’s safe to say that if you decide to make an investment in it then it won’t be a bad decision at all.