Fixed Deposits are a reliable investment option if you want stable returns and financial security. They offer you guaranteed interest rates and flexible tenure options, making them a preferred savings option. Let's learn more about FDs, their benefits, and their types to help you make the best decision.

What is an FD?

An FD is a financial instrument in which you deposit a fixed amount with a bank for a specific period. In return, you receive a predetermined interest rate. Unlike market-linked investments, FDs are unaffected by fluctuations, ensuring you a safe and predictable return. At the end of the FD's tenure, the bank returns you the principal amount and accumulated interest. The interest can be monthly, quarterly, or at maturity, depending on your selection.

Benefits of an FD

The following are the benefits of investing in an FD:

• Capital safety: Your investment is safe, ensuring no loss of the principal.
• Guaranteed returns: FDs offer fixed interest rates, providing guaranteed returns.
• Encourages savings: Locking funds in an FD promotes financial discipline.
• Flexible tenure: You can choose from a short-term or long-term deposit period.
• Loan facility: You can easily obtain a Loan against your FD if needed.

Types of FDs

The following are the different FDs that cater to different financial needs:

• Regular FD: It is a standard fixed deposit with a guaranteed return.
• Tax-saving FD: Provides tax benefits under specific sections of the tax laws.
• Senior citizen FD: Offers a higher interest rate for individuals above a certain age.

How to open an FD?

You can open an FD through online and offline methods:

1. Online mode 

• Log in to your bank's NetBanking or mobile app.
• Select the "Open Fixed Deposit" option.
• Choose the account from which to debit the FD amount.
• Enter deposit details such as amount and tenure.
• Select the interest payout preference (monthly, quarterly, or on maturity).
• Review and confirm the details to complete the process. 

2. Offline mode 

• Visit your nearest bank branch.
• Fill out the FD application form.
• Provide required documents, such as identity and address proof.
• Deposit the amount, and the bank will issue an FD receipt.

What is an FD calculator? How to use it?

An FD calculator is a virtual tool that helps you estimate the maturity amount based on the deposit amount, interest rate, and tenure. It simplifies financial planning by providing you with instant results. To use an FD calculator effectively, follow these steps:

• Enter the deposit amount, tenure, and applicable interest rate.
• The calculator will display the total interest earned and the maturity amount.
• Adjust the inputs to compare different scenarios before deciding.

Conclusion

An FD is a reliable investment choice if you want guaranteed returns with minimal risk. It offers you financial security and flexible tenure options to suit your savings goals. Additionally, use an FD calculator to help you plan your investments wisely.