One secure investment plan where you are bound to get assured returns is a fixed deposit, better known as FD. Banks offer various types of FDs. Depending on your need, you can choose best fixed deposit plan after assessing certain factors, such as the credibility of the deposit and the interest rates. FDs are easy to start and easy to manage. As FDs do not depend on financial markets, the amount stays secure and yields that desired result at a fixed rate and time.
What is a Fixed Deposit?
Banks offer various investment instruments, and one of the oldest and most secure investment instruments is the fixed deposit. It is a savings scheme that yields a fixed amount at a fixed interest rate for a fixed tenure. Assured return on deposit is the best part of making an investment through FDs. Leading financial institutions like RBL Bank provide various types of FD so customers can select wisely from the available options.
What is the eligibility for opening a fixed deposit?
With the entire operating system getting online and cloud-based, fixed deposits can also be opened online by going onto the bank’s website and fulfilling the documentation procedure and the eligibility criteria. In a few minutes, you can open up an FD account by choosing the best fixed deposit plans with the bank to secure your funds and reap future benefits.
The eligibility criteria to open a fixed deposit with the bank are as follows:
- Indian citizen residing in India. Non-Residential Ordinary and Non-Residential External fixed deposit accounts are available for Indians outside India.
- Identity proof like a Voter card, Aadhaar card, PAN card etc., is required.
- An electricity bill, telephone bill, and bank statement with a cheque as proof of address can be submitted to open a fixed deposit account.
How to select the best fixed deposit plan?
- The 5% interest rate criteria: The minimum interest rate for opening a fixed deposit account should be 5%. Most banks offer this interest rate, and any interest rate below 5% for a fixed deposit is not wise to entertain. Varied rates of interest are offered by banks, which should be taken into consideration while opening a fixed deposit.
- Credibility of the financial institutions: The credibility of financial institutions is an important criterion that should be considered while selecting the best fixed deposit plan. Credible financial institutions offer definite returns on deposits and the assurance of secure deposits over the chosen tenure.
- Cumulative vs non-cumulative FDs: One can opt for cumulative fixed deposit investment if one wants the principal amount and the interest upon maturity. If one wants to get monthly, quarterly, half-yearly or yearly interest, non-cumulative fixed deposits can be opted for.
- Ease of application: Any investment should be easy to make, especially in the internet era. Ease of application forms is one factor that needs to be considered while opening a fixed deposit with a bank. Online facilities for making deposits with documents to be submitted with ease should be given preference.
- Penalty on withdrawal: Given the circumstances, you might be required to break the fixed deposit before the maturity period, in which case banks impose a penalty on the beneficiary. Before investing, it is imperative to go through the amount of penalty imposed upon premature withdrawal of a fixed deposit.
Benefits of a Fixed Deposit
Fixed deposits are one of the best investment options that provide the beneficiary with steady returns at regular intervals with minimum risk and fluctuations. Fixed deposits are the easiest to withdraw in case of need. A premature penalty is imposed in case of withdrawal before maturity, but fixed deposits are still easier to take out compared to other types of investments.
Fixed deposit investments are made in various financial instruments like government securities, stock exchanges, equity-traded funds, mutual funds etc. The distribution of these investments is such that the investments stay secure even if any financial instruments face challenges. The option of tax saving is provided when an investor invests in a fixed deposit. So, a fixed deposit also becomes a good tax-saving instrument, and this option is provided in FDs offered by the RBL bank. FDs have a fixed tenure and can become a good instrument for saving taxes over a long period. So, you should carefully choose the best fixed deposit plan to reap the benefits of an FD.