Money lying idle in your bank account is a total waste even though you get interest on the savings account. Instead you should make money out of it by investing in secured instruments.
Now there are two different categories of investors:
No risk takers –
Who give high priority to money safety and low priority to the returns. That is they are ready to get low returns. Few of the zero risk investment products are – Fixed Deposit, Sukanya Samriddhi Yojana, National Savings Certificate, Public Provident Fund, Savings Account, Recurring Deposit and others.
High risk takers –
Who want high return but are ready to risk their money. Investment instruments are ELSS, equities (India and abroad), mutual funds, currency markets, and commodity market.
In this article, we’ll discuss about the highly preferred investment product – fixed deposit. Also called as term deposit. Investor has to put his/her money with the financial institution for a pre-fixed term and get interest on the deposit which is typically in the range of 6.5%-8%.
Let’s consider Rs. 5, 00,000 kept in fixed deposit for 5 years. Table below shows the interest earned along with the maturity value compounded quarterly from various banks in India:
|Name of Bank||Interest Rate %||Interest Earned in Rs.||Maturity Value in Rs. (Compounded Quarterly)|
|Punjab National Bank||7.2||214373||714373|
|Saraswat Co-operative Bank||7.15||212621||712621|
|Dena Bank, Lakshmi Vilas Bank, Tamilnad Mercantile Bank, Punjab and Sind Bank||7||207389||707389|
|IDBI Bank, Canara Bank,Central Bank of India, Bank of India, Union Bank of India||6.9||203921||703921|
|Oriental Bank of Commerce, UCO Bank, Axis Bank, Indus Ind Bank, ICICI Bank||6.75||198749||698749|
|Bank of Baroda, State Bank of India, Andhra Bank, Allahabad Bank||6.5||190209||690209|
Note: FD interest rates keep changing time to time. Check with the bank the current interest rate before locking-in your money.
More features of FD account:
- There is a minimum amount (which varies for each bank) to be deposited in the account
- You can deposit money for minimum 7 days and maximum upto 10 years
- The returns are taxable, if the interest income is greater than Rs. 10, 000.
- TDS is applicable on the interest earned
- Interest rates can change anytime
- You can get personal loan against FD
- There is a premature withdrawal charge
- Auto renewal facility is available
- NRI can also open FD account
- Senior citizens are offered slightly higher interest rates
- Nomination facility is available