FDs are traditional and the most trusted way of savings
Nowadays, there is no dearth of asset classes to invest in, however, the greater challenge is to choose the right investment avenue. Fixed Deposits (FD) may not be a new tool, but they have proved to be a smart choice especially in today’s volatile market. The advantage of fixed deposits is that they can be opened at a very small amount, or at a young age which offers steady returns with safety.
So what are the key benefits of a fixed deposit investment?
Firstly, FD investment inculcates a habit to save from a young age. It provides the security of assured stable returns and does not fluctuate like any other asset class.
Secondly, owing to the current scenario, a safe option to invest your money without face-to-face interaction can act as a blessing. You can open an online FD anytime, and anywhere via internet banking or mobile banking. For example, a DCB Bank customer can simply create an FD even without a savings account via DCB Zippi Online.
Thirdly, FDs are traditional and the most trusted way of savings. Today, banks also render value-added offerings in their fixed deposits such as free life insurance cover. For example, DCB Suraksha FD provides a free life insurance cover that is equal to the original FD amount, up to Rs 50 lakh and the age of entry is 18 years to a maximum of 54. There are benefits for senior citizens as well, where they can earn 0.5 per cent per annum extra interest which is subjected to terms and conditions.
Whilst there is uncertainty around us, in terms of health and wealth, there are banks that are attracting customers through viable options like an FD with healthcare benefits. For instance, DCB Health Plus FD offers attractive returns of 6.90 per cent interest per annum on a 700-day fixed deposit along with free medical services and healthcare benefits.
Fourthly, we talk about the benefit to invest in a tax saving FD that helps the customer save under Section 80C of the income tax act. Banks also provide an overdraft facility against the FD. This helps in keeping your FD intact yet raise funds for an emergency or business use.
Lastly, with an FD investment, the customer has the flexibility to plough back the interest earned at fixed time intervals or at the time of maturity. Also, they can leverage the power of compounding with a reinvestment option, wherein the customer can earn interest over accrued interest.
So go ahead, take the traditional route of saving and witness the power of compounding your wealth.
The author is Head, Retail SME Banking, DCB Bank
DISCLAIMER: Views expressed are the authors' own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.