Fixed deposits have always known to be the favorite avenue for investors, owing to their tendency to withstand the twists and turns, turbulence and fluctuations of the market with constant grace and consistency. Although there were reports that there are quite a few chances for a slash in the interest rates offered by banks, even with such a slash, investors continued to draw an exemplary amount of profit over time, proving that fixed deposits were indeed the safest bet investors could opt for. But with recent times, with a change in the market scenario, fixed deposits are said to continue their winning streak in a grand manner, as they are all set to dole out double digit returns to their investors. With the help of their performance, they are all set to exceed the performance of high risk stock market instruments. Fixed deposits have been the most reliable choice of investors owing to their predictability and nature to offer risk free and assured returns.
As the central bank of the country, the Reserve Bank of India is trying to hike interest rates further, loans are becoming increasingly expensive for corporate and retail borrowers, making the fixed deposits of banks all the more attractive, especially as their interest rates continue to rise with time. The major reason behind this hike is the Reserve Bank of India’s decision to increase its benchmark rates, and subsequently, all banks had to hike their interest rates and thereby, their fixed deposit rates. Another hike in interest rates can be expected if the Reserve Bank of India announces any such plans in the recent months. Many banks have introduced double-digit rates of interests, much to the delight of their customers, a phenomenon that had not been seen by the market for quite some time now. The volatile stock market that has become a high risk venture with much lower returns has in comparison, offered far lesser returns to their investors showing that the market hasn’t quite recovered from its disappointing spate of performance.
Before you invest your funds in a fixed deposit, conduct extensive research on the interest rates offered by various banks. After conducting a comparative analysis on which banks offer a desirable interest rate, look for a tenure that best suits your needs. For instance, in some fixed deposits, you need to deposit your money for a period of 5 years while in some banks the tenure may be for 10 years. There can also be a lot of variation in the interest rates offered by different banks for different tenures or periods of deposits. The method of calculating the rate of interest can vary as some banks may calculate the rate of interest on a quarterly basis, half-yearly, annual or on the entire period of maturity. In order to avail the maximum benefits with fixed deposits, it is best to split your investments. This is usually done to avoid the tax deductable as source or TDS. The interest that is gained from your fixed deposit can either be withdrawn or you can choose to reinvest it in the same scheme. If you would like to withdraw your interest, then it will be credited directly to your savings account that has been mentioned by you on its receipt. However, if you choose to invest such an interest, then you will have the added advantage of earning interest which will always be higher than the previous year’s rate of interest. On withdrawal of interest, you will be subject to the same rate of interest as last year. You can also opt to invest your funds in tax saver fixed deposits.