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Not everybody can successfully save money all the time. However, saving money is one of the most important aspects of building wealth. Saving a small portion of your earnings helps you enjoy a quality life. Irish poet and dramatist, Oscar Wilde, once said, “When I was young I used to think that money was the most important thing in life; now that I am old, I know it is.”
People who spend money wisely and develop the habit of saving it could grow wealth exponentially. There are various ways to save money today. A fixed deposit is one, and it is still the most sought-after investment instrument in India.
A fixed deposit, also known as an FD, is an investment instrument offered by banks, as well as non-banking financial companies (NBFC) to their customers to help them save money. With an FD account, you can invest a sizeable amount of money at a predetermined rate of interest for a fixed period. At the end of the tenure, you receive the lump sum, along with an interest, which is a good money-saving plan. Banks offers different rates of interest for a fixed deposit account.
You can choose a fixed deposit for a period ranging from minimum 7-14 days to maximum 10 years. This is why an FD is sometimes called a term deposit. When you open a fixed deposit account at a specific interest rate, it is guaranteed, for the rate of interest remains the same, irrespective of any changes, which happen due to market fluctuations.
The interest you earn is either paid at maturity or on periodic basis depending on your choice. You are not allowed to withdraw the money before the maturity. If you want to, you have to pay a penalty.
Irish poet and dramatist, Oscar Wilde, once said, “When I was young I used to think that money was the most important thing in life; now that I am old, I know it is.”
To know what is a fixed deposit clearly, you need to know its prime features. Here are the significant ones:
The returns of a fixed deposit are guaranteed. You will get the same return agreed at the time of opening an FD. This is not the case with market-led investments, which offers returns based on the fluctuations of interest rates in the market. You will receive the same interest that was agreed to you, even if the interest rates fall. This makes the fixed deposit more secured than any other investments.
The interest rate on a fixed deposit varies depending on the term you choose. However, the rate of interest is fixed. If you want to know the current FD interest rates, you can visit the IDFC FIRST Bank website here.
You can choose the tenure from 8 days to 10 years for an FD with the IDFC FIRST Bank. If you want to open an FD account, click here.
The interest you earn on the fixed deposit depends on the maturity period or tenure of the FD. With a higher tenure, you earn a higher interest. Moreover, the returns you get on your investment depends on whether you opt for receiving the interest periodically or reinvesting the interest, which is called a cumulative FD. You gain the benefit of compounding with this FD. You can calculate your fixed deposit interest with the IDFC FIRST Bank FD calculator here.
You can avail a loan against your fixed deposit in case you are in urgent need of funds. This saves you from closing your FD prematurely.
To know more about what is FD, and how to open a fixed deposit account with IDFC FIRST Bank, click here.
If you are a new customer and want to create an FD, you can click here to open an FD by opening a new Savings Account.
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