Which Financial Organizations Best for Higher Interest Rates
Despite the introduction of many new investment platforms and instruments in the market, Indian investors are still bullish on Fixed Deposits.
The risk-free nature of fixed deposits with the promise of guaranteed returns is an attractive proposition.
Even younger investors try to ensure that a part of their portfolio is reserved to be put into fixed deposit, which will mature over a period of time to a lump sum.
Do Your Research
Almost every bank nowadays offers fixed deposit instruments.
Additionally, certain organisations such as PNB Housing Finance Ltd are also authorised to offer fixed deposits with competitive interest rates.
Do your research well to scope out the highest fd interest rates.
If you are a senior citizen, typically, you can get a higher rate of interest. For instance, PNB Housing Finance offers Senior citizens above 60 years an additional rate of interest of 0.25%.
The amount of interest earned will also be more when the tenure of your fixed deposit is longer. There are cases when the amount will double, too. For example, if you are earning a post-tax interest of 8.70% per annum on your fixed deposits, the amount could double in 8.27 years.
FDs and Savings Accounts
Sometimes investors choose to invest their money in a particular Fixed Deposit because they have a savings account with that particular bank. This is not a great idea as you will losing out on the best interest rates.
Nowadays, you can open a Fixed Deposit in a bank with the best interest rate without having to open a new savings account.
However, you may have to complete a Know Your Customer process, which requires you to submit ID proofs, coloured passport size photos, along with original documents during verification.
Understanding Your Needs
Once you have identified a good service provider, decide how much money you can put away and for what time frame. Remember that the longer the time frame, the higher the interest you shall earn. Typically, the starting investment for opening your fixed deposit is INR 10,000.
However, it is ideal to look at higher amounts for these instruments.
You can also choose from two types of Fixed Deposits, as follows:
- Cumulative Fixed Deposit: In this case, the interest earned is credited to the fixed deposit annually and paid out as a lump sum at the time of maturity along with the principal. You can build a corpus through the power of compounding.
- Non-cumulative Fixed Deposit: In this case, the interest earned is paid out to the depositor at a pre-decided frequency – monthly, quarterly, half-yearly or annual. These regular interest payments are typically used to meet your daily expenses.
Plan Your Investments Well
Even if you do open a Fixed Deposit with the highest fd interest rates, the premature withdrawal will result in a low rate of interest applied. Hence, it is extremely important to plan your investments well.
For example, you should ensure that you have a separate emergency fund for urgent expenses.
This money should be in liquid form, unlike a Fixed Deposit, which is inaccessible and loses its true value in the case of a premature withdrawal.