Fixed deposits: things you should know before investing in federal funds

NEW DELHI: The fixed deposit is a long-term investment tool that helps you save and invest money from your monthly income. Investments made in fixed deposits provide guaranteed returns for a fixed period of time.

Among the most reliable and preferred means of investing, fixed deposits provide a fixed interest and profit when investments are made over a particular period of time. In addition, these are chosen by most people as a tax saving option.

What are the benefits of fixed deposits?

Provide fixed returns: You get safe returns when you invest in fixed deposits. Unlike other investment options where returns are not fixed due to market volatility, fixed deposits offer fixed returns regardless of the amount you have invested. This is one of the main reasons why fixed deposits are the safest option for many people and are part of their investment portfolio.

Flexible investment tenure: Many banks allow you to invest in fixed deposits that have a duration of 7 days up to 10 years. Because of this, DFs are a good option for short, medium and long term financial goals. In addition, the interest rate varies according to the period of investment time you select.

DF are liquid: Liquid assets are those that can be easily converted into cash when necessary. While you must pay a fine for early withdrawal of FD, but it is still considered the smartest and safest investment option. If there is an emergency, you will have to pay a small fee for early retirement and use the money for your expenses. Due to this facility, you can always depend on the amount saved in your fixed deposit amount.

Fiscal benefits: You can save on taxes with tax-saving FDs that have an investment period of 5 years. Under Section 80C of the Income Tax Law, you can claim a tax deduction of up to Rs. 1.5 lakh in interest earned on your FD.

Loan against FD : A fixed deposit is not only a smart savings option, but also offers numerous benefits. For example, many banks offer the loan facility against FD. Account holders can request a loan of 90% of their capital and interest. If there is a requirement for a quick loan to handle a financial emergency, then the loan against FD can be a good and useful option.

How to open a fixed deposit account?

Users who are interested in opening a fixed deposit account can open one of two ways, online and offline. Opening an online FD account is easy today. Those who have a bank account on the Internet can open an FD account themselves. All you have to do is fill out the online form with your bank and send it.

In addition, you can also open an FD account offline. For this, you must visit your nearest bank branch, obtain the application form and send it with the required documents.

What are the documents necessary to open a fixed deposit account?

Each bank requires certain documents to open a fixed deposit account. The applicant must submit the documents along with the application form to open an FD account. Here is the list of documents you need to gather to send:

Proof of identity:

  • Aadhaar card
  • Pan Card
  • Passport
  • Voter ID Card
  • Ration card
  • Driver's license
  • A government ID card
  • A senior identification card

Proof of address:

  • Telephone bill
  • Passport
  • Electricity bill.
  • Certificate or identification card issued by the post office
  • Bank statement

Passport size photographs