It is becoming increasingly important to look for good returns on FD as there is still a pandemic impact on the market. In 2022, Fixed Deposits are a good investment option because the economy is transforming into a digital world. Few banks offer a good return on Fixed Deposits, and the maximum interest they offer is 6.5%.
You can easily calculate the return of your investment using the FD return calculator online tool. If you are looking to be investing in bank FDs as a retirement investment option, you have a lot of options available with all the better returns in percentage terms available on the market. Despite that, you should consider ways to increase the returns on your FD rather than going for a traditional bank FD.
Listed below are a few factors to consider for better returns on FD
Choose corporate FDs over bank FDs
Similar to Bank Fixed Deposits, Corporate Fixed Deposits offer the security of guaranteed returns and the flexibility of choosing the deposit term. It is generally the case that the Corporate Fixed Deposits are offered between 1% and 3% higher interest rates than what the Bank Fixed Deposits offer for a similar period. The advantages of these FDs include guaranteed returns, ease of online application, and higher returns. As part of these FD schemes, you can choose to receive a return every month or quarterly, depending on the options you choose. And the best thing is that you can also calculate your maturity amount in corporate FD by using the FD return calculator online tool, similar to traditional Bank FD.
Compare FD interest rates
To get the most out of an FD, comparing the interest rates offered by other financial institutions before committing to a particular one is essential. Different lenders offer different rates of interest on FDs to their clients. To do this, choosing the one that will provide you with the best return on your investment is essential. Comparing the interest rates on FDs and calculating the maturity amount with different interest rates using the FD return calculator online tool will help you choose the best FD and maximize the return on your investment.
Choose a cumulative FD for higher returns
If you’ve decided on a corporate or bank fixed deposit after checking the maturity amount by using FD return calculator online tool, the next step is to maximize the return on your fixed deposit. Both cumulative fixed deposits and non-cumulative fixed deposits are available to you at the same time. Invest in a cumulative fixed deposit if you want a better and higher return on your investment. You will receive both the interest and the principal at the maturity of a cumulative fixed deposit. In a cumulative fixed deposit, the interest on the principal is added to the principal regularly or periodically. Consequently, you are earning interest on interest due to your investment. Many people consider it one of the best retirement investment options.
Increase your liquidity by investing in various FDs
When you invest your money in a variety of fixed deposits, you will benefit from receiving consistent returns as well as liquidity at the same time. If you want to make the most of your investment, make sure you build a ladder of FDs with different tenors. Instead of investing all your money in one fixed deposit, you could divide the amount into two or three and invest each in a different fixed deposit instead. As a result, you will be able to liquidate the investment in case of an emergency while at the same time giving you the chance to earn a great return on your investment.
Invest in FDs that offer tax benefits
Most investments offer the investors a tax benefit. You can take advantage of tax benefits on your investment. By investing in a tax-saving FD, an investor can claim up to Rs 1.5 lakh as a tax deduction under Income Tax Act, 1961. A fixed deposit is one of those investments eligible for tax benefits. An investor who invests in the second option is offered a tax advantage on the interest or returns earned from the investment in the form of a direct benefit.
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