For people new to investments and investors who like to stay cautious, savings are synonymous with Fixed Deposits. FDs are a popular choice among risk-averse investors. This is especially true for investors who prefer to invest their funds for the long term. A Fixed Deposit in India helps in a financial emergency. Here are the advantages FDs offer when you choose them to deal with financial distress:
Secure
If you are not up for market volatility, FDs are the safest investment options available. When you open FDs, you also need not worry about changes in interest rates. This is because the rate is fixed for the deposit tenure. Hence, you receive assured returns.
Easy withdrawals
FDs provide some financial flexibility. During emergencies, you can withdraw your deposit prematurely. The money then gets credited to your Savings Account instantly. While your bank charges a penalty for this, you can access the funds you deposit whenever required.
Multiple tenures
When opening an FD, banks provide multiple durations, ranging from seven days to five years. So, understand your financial needs and select a tenure that suits them. The Fixed Deposit interest rate also varies based on the tenure. Usually, the longer the FD term, the higher the interest rate. However, this may vary across banks.
Easily accessible
Opening an FD is easy nowadays. You need not visit your bank. It also does not involve any cumbersome paperwork. With technological advancements, you can conveniently open your FD from anywhere and at any time within minutes. Login to the banking website and open your FD online without hassle. Choose an amount based on your financial goal.
You can also customise the FD tenure based on your convenience and select the preferred maturity instructions.
Insurance coverages
Most of the Fixed Deposit in India are insured up to a maximum of Rs. 5 lakh by the DICGC. This applies to your FD as well. Hence, when you use Online Banking portals to open an FD, this feature adds another layer of safety to it.
Conclusion
Having an FD can be helpful when you face an emergency. Opening an FD also ensures you do not overspend your money on unnecessary needs. It provides assurance during emergencies. It is also liquid and offers other benefits, like assured returns due to fixed FD rates. Now that you know the advantages, you can open one to realise its potential to the maximum
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