Savings are the umbrella you create for a rainy day. You should look at savings with fresh understanding. The idea should be to save first and then spend. Your savings equation should look like this.

Income – savings = expenditure

Once you make savings your priority, choose the instrument that will keep your principal safe and generate decent returns. You can divide your savings in many different investment schemes, but the first step is to start a substantial FD that gives you stability. Open your fixed deposit account as soon as you start earning.

Five reasons why you should start a Fixed Deposit account

There are many reasons why you should save in the first place, but these five concrete arguments in favour of starting a FD account should encourage you to do the same.

  • Fixed deposits are probably the safest instrument that will allow you to save. It is risk free as the banker or NBFC has to keep your deposits up to 1 lakh insured. The bank should be a reputed one recognized by the government. You will also get the best FD interest rates. In this way you ensure full safety of capital. Do not fall prey to chit fund companies and others who offer FD’s at high interest rates. The FD has a fixed tenure and a fixed maturity too. This makes the instrument free from market related risks and completely safe.
  • The FD may be a conservative investment, but it gives good returns over the long term. If you take care not to break your deposits pre-term, your returns should be on track. Rate of interest is better than that of savings deposits. If you choose to go with a smaller bank or a cooperative only, you will find that interest disbursed is higher. It helps if you decide not to break the deposit prematurely. This can mean a heavy loss in interest.
  • A fixed deposit has a flexible tenure or the investment period. You can fix your savings for a tenure of your choice. You should check out the rates for the different timelines and make a choice. The range of options is vast. You can choose a period of seven days to ten years according to your requirement. Do remember that you can also put your tax deductions under Sec 80 C into a special FD that caters to the tax saving section.
  • If you are ever in urgent need of money, you can use your FD as leverage to get a loan. Your bank may give you about 60-90% of the total amount as a loan. Many financial institutions may use the FD document as a mortgage and loan you the amount against the deposit.
  • FD’s are the best way to use amounts as small as Rs 10,000 to start saving. Every time you manage to save Rs 10,000 you can open a FD account.

Open your fixed deposit account today and enjoy peace of mind. Savings are very important in our life and FD’s are the primary way to save securely.

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