At a time when modern investment tools like equities, mutual funds and systematic investment plans (SIPs) have forayed in, traditional tools like fixed deposit and recurring deposit accounts seem to be losing their charm. Several investors choose to invest in SIPs and other up-to-date tools in order to secure maximum returns.
However, does that mean traditional tools are almost about to lose their sheen? Well, not really. Tools, especially fixed deposit (FD) accounts continue to attract customers on a regular basis. Though rates of interest in banks might have somewhat lowered over time, nonetheless, traditional investment tools continue to retain their charm among many investors who avoid taking too many risks with their money.
There are several benefits of investing in traditional tools like FD accounts. Let’s take a look at the top benefits of investing in a FD account.
Among all kinds of benefits, guaranteed returns on your invested money are the foremost. Unlike other forms of investments, especially stock markets, FD accounts do not carry so much of risk and of course not influenced by market dynamics. Investors can be rest assured that, their hard-earned money will yield as much returns as possible, depending upon the rate of interest offered by the bank.
The next major benefit of investing in an FD account is that, one can withdraw the money easily whenever required, against a small penalty though. The investor might have a financial emergency such as an accident or something. In order to meet those needs, he can withdraw the amount deposited (before maturity) against a small penalty. This penalty amount is usually less than that of selling stocks or even real estate. The amount deposited in a FD can be withdrawn at any time and all you will lose is a certain amount of interest.
Flexibility is yet another aspect that draws attention of investors. FDs can be taken for tenure for 1 month or 10 years, depending upon your need, you can choose the amount. You can choose the tenure of your FD investment. For example, you have planner for a big event in five years’ time, then you can open a FD account for the same tenure. You can also have more than one FD account to achieve different financial goals.
Fixed deposits usually require you to invest the amount for a certain period of time to accumulate and acquire the said interest amount. This move in fact, encourages the habit of savings in an individual. He or she will not be tempted to spend the money whenever she wants to.
These are some of the benefits of investing in a FD account. While you can open an account any time with a bank of your choice, the process is also very simple. Do remember to choose the right tenure that suits you the best!