If you are one of those people who live in one of the metropolitan cities of India, then you know the pain it takes for you to survive and sustain in a big city with a very limited income. Every month, when you get your salary, it vanishes in the blink of an eye. The problem with most Indians is that they are big on investments, but they do not know where to invest their money in and where will they get better returns on their investments.
While the younger generation is taught from the very beginning to save, hardly do they succeed in doing so when they start earning. That, added to how expensive even the basic commodity in an urban city is, makes it very hard to save money. Saving funds is an important decision that one needs to make, as you never know when you might need some cash urgently. Even with so many saving schemes in India, it becomes difficult to even put aside a small chunk of our very limited income and put it into something that we might not have access to for at least a few days or months.
Saving for a Rainy Day:
It becomes really difficult to save when the money that you’ve earned is spent on so many things like food, entertainment, shopping, and even spending on things that you might not really need. One of the best ways that you can save money is by investing it in term deposits.
Here are a few things that you need to understand before you invest in term deposits:
- Why Invest in Term Deposits?
Term deposits are deemed FD as one of the safest investments options in India since you can be sure that you will get returns on your investments. One of the most important things to remember about investing in term deposits is that you will not have access to the amount that you invest until the term deposit matures. You will earn a pre-decided interest amount on the money that you invest.
- What are the Types of Term Deposits?
There are two types of term deposits, viz. fixed deposits and recurring deposits. When you opt for fixed deposits, you only deposit once during the entire tenure of the fixed deposit. But when you opt for recurring deposits, you have to invest a certain amount from your income every month. The tenure of the term deposit is completely dependent on your financial goal and financial stability. Your term deposits can range from 12 months to 60 months.
- How will you Receive the Interest Amount?
As mentioned earlier, you will earn a fixed interest amount on the money that you invest. You can choose to get these returns on a regular basis or you can also choose to get the entire interest amount at the end of the tenure. If you choose to receive the profits on a regular basis, you can do so on a monthly, quarterly, half-yearly or even yearly basis. If you choose to receive the profits at the end of the tenure, then your monthly profit will be reinvested and you will earn a higher amount at the end of the tenure.
- You Cannot Break your Fixed Deposit:
One of the disadvantages of fixed deposits is that you will not be able to break your fixed deposit before the end of the tenure. If you do so, you will be charged with a penalty by the financial institutions. But, you can opt for an overdraft facility. In an overdraft facility, you can take a loan up to 90% of the invested amount and you have to pay an interest on the amount that you borrow.
Investments in fixed deposits are also safe because the amount that you invest gets an insurance of up to INR 1 lakh. If you want to know the exact amount of returns you will earn, you can take the help of fixed deposit calculators for checking the maturity amount.