Whether you are a salaried person or self-employed, saving money is one of the essential requirements for you. However, saving money is easy to say than doing it. We all want to save a certain amount of money but end up spending it all, but this can lead to many problems especially in the long run when you need money for some emergency. Therefore, it is always a smart choice to save money instead of spending less. Therefore, you must choose to save your money and after that manage your expenses to get ready for any situation of emergency that can come in the future. In addition to this, it is always advised to start saving money from the early stage of life and make lesser debts, if possible.
The thumb rule to start saving is to make a monthly budget and stick to it and when you have surplus funds, you should invest them instead of keeping them in your savings account. This will enable you to earn more interest in your investment funds. For investment, you can select the stock market, mutual funds, etc. However, all these investment options have high risks associated with them and on the other hand, fixed deposits earn fixed returns on your funds without involving any risk.
Here we are going to discuss fixed deposits and how they help you to save your money:
It is a type of term deposit that is considered one of the safest investment options that are available in the insurance market. Most of the Indian banks and financial institutions offer the facility of fixed deposits. The tenure of FD ranges from seven days to 10 years. You can get high FD interest rates than a normal savings bank account and the interest can be credited on a yearly, quarterly, and monthly basis. In FD you have to invest your needed amount in one go. If you want to withdraw funds before the maturity period, financial institutions and banks may charge a penalty on premature withdrawal on your FD.
The fixed deposit schemes offered by banks are considered as one of the safest investment options wherein you invest a lump sum amount for a specific period. The rate of interest on FDs depends on tenure and the principal amount that you invest. For example, PNB FD interest rates are 5.20% for a deposit that is less than Rs.2 Crore and for a tenure of one year. The interest in FD is paid out in two ways –
1. Cumulative Deposit:
Under this, the interest is calculated on an annual and quarterly basis and it is paid out upon maturity.
2. Non-Cumulative Deposit:
Under this, the interest is calculated quarterly, annually, or at discounted monthly rate.
The corpus that you get upon maturity can be used to purchase a house or land, marriage or education of children, and for fulfilling other investment goals. Mentioned below are some reasons to invest in a fixed deposit:
Investing your money in fixed deposit not only help you to earn money, but it also enables you to save money in the following manner:
Even though financial institutions and banks allow you to withdraw money before the maturity date, but the premature withdrawal of FD attracts a penalty. So, you may save a lot of money by opening an FD account and keeping the deposited amount till maturity.