How Is Fixed Deposit Better Than Any Other Investment?
Every time a financial year is at our doors, we begin thinking about redefining our financial strategies and saving taxes. Experts claim that even those who do not have heavy tax burdens should have a clear economic vision for the future. A smart financial strategy would encompass investments in the right place with minimum risks and maximum returns. Interestingly, minimum risks and high yields do not complement each other, i.e. investments with low risks might not provide returns and vice versa. Research states that most Indians prefer conventional or risk-free investments with significant gains. Fixed deposits are one of the more suitable investment options available in the market to suit such requirements. Let us try to understand why fixed deposits are better than any other investments:
Most investors claim that FDs or fixed deposits are one of the safest investment options available today. FDs are not subject to market risks, and hence the principal amount invested in a reliable bank/NBFC is safe. If you are a novice and venturing into the investment game, you might want to consider fixed deposits.
Talking about the low-risk factor, we also want to add the security of a financial instrument. After all, it is your hard-earned money, and you do not want to lose it for any reasons. How do you ensure your money is in safe hands? One good way is to deposit your funds in a high CRISIL rated financial institution. The highest rating assigned by CRISIL is FAAA, and you need to determine the financial stability of the bank/NBFC before parking your funds in them. It would be best if you also find a balance with the CRISIL rating and an institution with reasonable FD interest rates so that you are in a win-win situation. Additionally, funds thus invested in a fixed deposit account are comparatively safer than other types of investments.
It would be incorrect to state that FDs provide the best returns in the market. There are several other financial instruments, like mutual funds, which offer better returns. The problem with mutual funds is that they might be affected due to market volatility, and you would be unsure of the gains after a certain period. Internal factors like a public company’s performance and external factors like a global meltdown can impact the share value of the mutual funds. In case of a fixed deposit, the FD interest rates remain the same until the maturity of the fixed deposit account. Hence considering several factors, fixed deposits provide reasonable returns for the investors.
Fixed deposits are great if you are considering long term financial goals as your objective. The corpus funds accumulated for a more extended period of 10 years along with the accrued interest can provide excellent benefits. Additionally, you can also avail loan against fixed deposits in case of emergencies. There are multiple fixed deposits with different kinds of tenures that can cater to your financial requirements.