It is possible that keeping all of your money in a savings account isn’t the best idea.
Fixed Deposits and Savings Accounts are both good options for storing excess funds since they both provide stability and protection.
On the other hand, Fixed Deposits are a good option if you’re looking to increase your money while maintaining some degree of flexibility.
As a financial instrument, a fixed deposit pays interest at a predetermined rate until the maturity date. Fixed deposits offer a number of additional advantages that make them a popular choice for investors.
#1 Fixed Deposits may be tailored to suit your needs
Accountholders have just a few options with a savings account.
There are no fluctuations in interest rates for savings accounts. All banks provide savings accounts that are almost identical in terms of features.
However, there is a variety of FDs to choose from according to one’s financial goals and preferences.
A flexible deposit programme, for example, is one in which your FD account is connected to your savings account.
If you choose one of these plans, you may set a savings account threshold over which the excess money will be put automatically in a fixed deposit. It makes it easy to invest extra money.
#2 Higher Interest Rate
Fixed deposit accounts provide a greater rate of interest, which helps investors earn more money over the long term. When compared to a savings account, short-term fixed deposits may provide superior yields.
With the money you’ve saved, you can easily outpace inflation. As of now, FD interest rates usually ranges between 3.50% to 7.50%,
#3 Guaranteed Returns
Fixed deposits are investments that provide a fixed rate of return regardless of market changes.
You may use an online fixed deposit calculator to estimate your investment’s return. Your funds will rise as a result of this improved monetary planning.
#4 Higher Interest Rates for the Elderly
Fixed-deposit returns for senior individuals are greater than those for the general population.
Different banks give varying yields on a savings account, but the interest rate paid to all account holders is the same regardless of their age.
Compared to savings accounts, fixed deposits offer a modest advantage in this area. Senior people are given a 0.25% to 1% greater interest rate on their fixed deposits compared to the regular FDs.
Because of this, fixed deposits might assist you in fulfilling your financial obligations by providing much-needed financial support.
#5 Recurring Payments of Interest
FDs, unlike savings accounts, pay interest on a regular basis, allowing you to plan your spending in accordance with your needs.
Post-retirement, these dividends are a great source of monthly income that may be used to cover your usual needs.
Non-cumulative FDs are a good option if you want to receive regular interest payments on a monthly, quarterly, semi-annual, or yearly basis.
Investments in cumulative FDs, on the other hand, may provide you with a total return on your investment.
#6 It Encourages the Savings Habit
Fixed deposits have a fixed lock-in period, which prevents you from withdrawing your money prematurely until maturity.
On the other hand, a savings account allows you to withdraw any amount at any moment, which works against your aim of wealth appreciation.
As a result of being unable to easily access your money, you wind up saving more.
This enables you to take advantage of compound interest, which increases your profits by adding them to your principal and so allowing you to make more money.
#7 Provides a Greater Degree of Security
Fixed Deposits (FDs) allow you to lock in your investment for a certain length of time.
In a fixed deposit account, you may choose from a variety of terms, ranging from 7 days to 10 years.
You may invest in any of the banks that are giving the greatest FD interest rates, regardless of the length of the term. To prevent any hasty withdrawals, make sure you make an educated selection.
Conclusion
Some major banks have dropped FD interest rates so dramatically in recent months that they now seem to be on the level with savings account interest rates.
In truth, several local financing banks and smaller private sector banks provide savings bank rates that are greater than the fixed deposit rates given by PSU banks and larger private sector banks.
However, the interest rates on savings accounts given by these small financing banks and smaller private sector banks vary according to the amount in the savings account.
As a result, if you want to maximize your wealth, pick a proper FD term for desired returns instead of a savings account, which is what you would normally do.
In order to get what you want; a Fixed Deposit is the best option for you. Click here for more details.
