How to Liquidate Funds in Fixed Deposit Investments?

Investment these days has become a preferred option for many. People usually opt for investing than saving their money, as investing help in replicating their funds. It is often seen that people go for investing their surplus income coming from business profit, salary hike or even pension fund for that matter. It is usually suggested to invest rather than saving funds, as you can earn higher returns on investments.

When it comes to investments, they are two types: high-risk investments and low-risk investments. People generally prefer investments which involve low risk and Fixed Deposits are one of them. Fixed Deposits are considered as a safe investment among all other investment options. Although FDs involve low-risk, they still offer their investors with higher returns.

Interest rates offered on Fixed Deposits is high as compared to a savings account. Also, fixed deposit offers a fixed rate of interest throughout the loan tenure. As fixed deposit interest rates don’t depend upon the market conditions, they are said to be less risky. As we all know that the market condition is never stable, rather it keeps on fluctuating which can make the investments risky. As fixed deposit have a fixed interest rate, it is a safer option for the investors.

It is also important that one knows about fixed deposit interest rates as they are considered as an important factor. The interest rate that you earn over your fixed deposit is what decides your returns. Thus, it is mandatory to choose a financial institution which offers a high rate of interest on FD. It is essential that you know that fixed deposit interest rates differ from each financial institution. You might come across a financial institution which offers you a high rate of interest, whereas, another financial institution will be offering you with a low-interest rate on the same amount.

Though checking your interest rates is important, it is also significant to check whether the investment that you are opting for offers you easy fund withdrawal. Many people usually forget to check this as their main aim is to earn higher returns. A financial emergency can knock your door anytime. And during such financial crises, it is not always that you might have some financial backup. At such times, Fixed Deposits can be your only helping hand.

How to Liquidate Funds in Fixed Deposits?

When it comes to withdrawing funds, it is essential to know that fixed deposit restricts its investors to withdraw funds before its maturity. In case if you wish to withdraw funds from fixed deposit then you might have to break your FD. But if you break your fixed deposit then you will have to pay a penalty and if you want to invest in Fixed Deposits in the future then the lenders will offer you a lower interest rate.

Overdraft Facility:

When you want to withdraw some funds, you can opt for an overdraft facility. An overdraft facility allows you to withdraw up to 90% of the cash from your fixed deposit account. You don’t need to break your fixed deposit if you avail an overdraft facility. An overdraft facility is a loan which the investor can take against its fixed deposit account. Since an overdraft facility is a loan, it is mandatory to pay an interest over it. The interest rate that is charged over the amount that you withdraw depends upon your financial institution. You have to repay the amount that you have borrowed along with the interest during the pre-decided time.

Though fixed deposit does not allow you to liquidate your funds easily, you can still opt for overdraft facility in order to withdraw funds during financial crises.

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