Among the many investment options available in the country, fixed deposit investment plans are the most popular. Most people prefer to invest in a fixed deposit plan for the simple reason that FDs assure guaranteed returns. It is the most powerful way to reach all your financial goals in a practical manner. In a fixed deposit, you have the flexibility to deposit any amount that you want at desired fixed deposit interest rates, and for a fixed tenure. You’ll earn interest along with the principal amount so invested at the end of the tenure. Simple and straightforward!

There are a few strong points that make fixed deposit plans a smart investment in today’s world. Here are those reasons:

  • Zero Risk & Guaranteed Returns

You can have a peaceful sleep in the night knowing that FD plans pose negligible risk and you are far away from worrying about fluctuations in the market. They give guaranteed returns, and you will definitely receive the promised amount at the end of your tenure. This investment option not only provides stability, but also secures your investment portfolio. Therefore, at least some amount of your savings and investment portfolio should be invested into an FD.

  • Flexibility

Fixed deposit plans offer flexible investment tenure, regardless of the duration you choose. In a FD plan, you can select any tenure between 7 days to 10 years.  It also provides the flexibility of depositing the amount of your choice. Therefore, whether your financial objective spreads over the short term or the long-term, fixed deposit is an intelligent investment option for the same reason.

  • Compounding

Your fixed deposit provides the benefit of choosing the frequency of your interest returns. You can select whether you wish to receive the interest monthly, quarterly, half-yearly, annually, or all together at the end of your term. The interest amount you receive on your FD interest rates can also be re-invested, which compounds your earnings. This means that not only will you receive interest on your principal amounts, but also on the interest that you earn originally. FD rates in India vary between the 6% to 6.90% mark for each year

  • Loan Benefits

During times in life when you require solid financial assistance, FD plans can come to your rescue, as fixed deposit plans provide loan facility as well. FD plans in certain banks allow you to borrow 90% of your principal amount and the interest earned as a loan against your fixed deposit. This benefit can be a lifesaver during your times of need.

  • Premature Withdrawal

Although it is always more beneficial to finish your tenure in an FD plan, still there is an option for premature withdrawal. There is a penalty for the same, but even so, fixed deposit plans are highly flexible and a liquid investment options. Some banks also provide the option of partial withdrawal, in which case the interest will continue to accrue on the balance amount.

To stay away from the volatility associated with the stock market and to earn an assured returns, fixed deposit are your best friends. You can plan your finances effectively using fixed deposits. It helps you grow your corpus to a sizable amount in a couple of years while you relax and watch it grow irrespective of the market conditions.