Fixed deposits are regarded as one of the most popular ways of investment in the country. Due to higher stability and security, most people prefer fixed deposits to invest their savings. The fixed deposits add high stability and security to your principal amount. It is considered to be one of the safest investment options and promises guaranteed benefits. You can invest your money as per your financial requirements for a specific amount of time, as mentioned by the business companies.Fixed Deposit are a durable form of investment. Compare different fd rates in India and select the best FD Scheme. However, one should know the facts required to choose a particular fixed deposit scheme. 

How to choose the right fixed deposits

If you are planning to invest your money in fixed deposits in financial or non-banking financial companies, please keep track of the terms and conditions presented along with the scheme. Here are some of the ways to choose the right fixed deposit.  

Interest rate: It is one of the essential factors to take into account while zeroing a fixed deposit scheme. But if you prefer bank deposits, you should not only consider the interest rate but also be careful about the ease of investing your money. It is recommendable to pick a scheme where you can get at least a 7% as interest rates.

Check the credibility: If you are planning to invest in fixed deposits, make sure of the credit ratings of the organizations. The ratings that start with the letter A are more reliable. Always opt for organizations whose ratings are granted by CRISIL or ICRA. 

Tenures: Tenure is another essential factor that needs to be considered for a fixed deposit. Depending on the time duration, you can expect the return of your investments with benefits 

  • Cumulative FDs- In cumulative FDs, the interest rate is compounded quarterly, or yearly and are payable at the time of maturity along with the principal. In this scheme, there is no fixed interest payable.
  • Non-Cumulative FDs-  If you want to get your interest every quarterly, or annually or directly at the time of maturity, you can select a cumulative fixed deposit option. But the interest you earn from cumulative FD’s is taxable. 

Interest compounding frequency: If you want to know how the interest is calculated on your savings, then you can calculate it from your side also. If you’re going to reinvest the credit you earn, you can reinvest it, and thus the final return of your investment will be much higher.  

Interest payout option: The FD you are choosing must provide a wide range of payout options. After completion of your investment phase, the total amount will be invested in the annuity fixed deposit for the payout option. Always maintain regularity to check the frequency of the payout option.

Penalty option: In the case of fixed deposits, we cannot withdraw our money before its maturity period, but you can get the opportunity to break down your fixed deposit. This becomes indispensable when you are in extreme financial need or finding a better option somewhere else. You might have to pay the penalty for it for early withdrawal. So, please make sure you have an idea of the charges before investing.

Fixed deposits are usually widespread among senior citizens since they are generally higher than the average fixed deposit interest rate. However, it is always advised not to run after the prices blindly. One should read all the rules and regulations before investing in a particular scheme. 

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