Fixed Deposit, Are you a risk-averse investor looking for a safe and reliable investment tool? Look no further than fixed deposits (FDs). FDs have long been favoured by investors seeking stability and predictable returns.
Their appeal lies in the fact that they are not subject to market volatility, and the returns are predetermined and guaranteed. But did you know there are some ingenious hacks and tips that can help you maximize your returns from FDs?
In this blog, we will explore smart strategies to ensure you get the most out of your fixed deposit investments. Join us as we uncover the secrets to maximizing your returns on FDs.
Maximizing Returns on FD
1. Plan Your FD Investment
To optimize your returns on fixed deposits (FD), it is crucial to carefully plan your FD investments. By devising a well-thought-out strategy, you can maximize the potential gains from your FDs. Start by assessing your financial goals and determining the duration for which you can lock your funds.
Consider the interest rates offered by various banks or financial institutions and compare them to make an informed decision. Additionally, it is advisable to stagger your FD investments by distributing your funds across different maturity periods to benefit from varying interest rates.
By planning your FD investments diligently, you can enhance your returns and ensure a secure financial future.
2. File Your Returns on Time
One key aspect of maximizing returns on fixed deposits (FD) is ensuring the timely filing of your returns and staying updated on the latest changes in tax on FD interest.
Filing your returns on time not only helps you avoid penalties but also allows you to take advantage of potential tax exemptions. By submitting forms 15H or 15G, you can potentially qualify for tax exemption, particularly if you belong to a low-income bracket. It’s important to stay informed and make the most of these opportunities to optimize your FD returns.
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3. Check Out the Rating of the Fixed Deposit Scheme
If you’re looking for secure and high-yield fixed deposit plans, consider AAA-rated options endorsed by agencies. To find the top-rated FD schemes, visit the official websites of rating agencies. Additionally, make sure to compare the return rates offered by different banks and financial institutions.
Notably, corporate fixed deposit schemes often provide better interest rates compared to certain bank deposits. In some instances, corporate fixed deposit rates can be up to 3 percent higher than those offered by banks.
Thus, for maximum fixed deposit returns, it is advisable to explore high-rated corporate fixed deposit schemes rather than traditional bank deposits.
4. Start FDs for Parents
If your parents fall under the non-taxable income group and are considered senior citizens, a great way to save on income tax while earning a higher interest rate is by opening a fixed deposit in their name.
Many banks across the country provide senior citizens with an additional interest rate of 0.50 to 1 percent compared to regular citizens, making it a beneficial option to explore.
5. Focus On the Yields
While many individuals primarily focus on the interest rate offered by a fixed deposit account, it is crucial to consider the yields as well. Different schemes provide compound interest on term deposits either annually or quarterly.
It is worth noting that opting for quarterly compounding can result in higher overall yields. Therefore, it is advisable to carefully assess this aspect when selecting an institution to begin your fixed deposit account.
6. Try Out Cumulative Fixed Deposit Schemes
When considering the difference between cumulative and non-cumulative fixed deposits (FDs), the key distinction lies in how the payout is structured. With non-cumulative FDs, you receive interest payments at regular intervals, such as monthly, quarterly, semi-annually, or annually.
On the other hand, cumulative FDs accumulate interest and provide a single payout at the end of the investment period. Opting for a cumulative FD allows your interest to compound, resulting in higher overall earnings.
However, if you prefer receiving periodic payouts, a non-cumulative FD would be the more suitable choice. Ultimately, if your main goal is wealth generation, a cumulative term deposit scheme would be your best option.
7. Avoid Liquidating Your FD Prematurely, Consider a Loan Instead
Unexpected situations can occur at any moment, and although turning to your fixed deposits (FDs) for assistance might appear reassuring, withdrawing them prematurely can significantly impact your invested earnings.
Additionally, you will incur penalties for breaching the terms of your agreements. However, an overdraft facility tied to your FD can provide a protective cushion during emergencies.
This facility enables you to borrow from your FD, paying interest solely on the utilized amount and for the duration it was used. Certain corporations even offer the option to access up to 75% of your invested sum as an overdraft, providing a valuable safety net when you need it most.