Unlock Your Financial Potential: Choosing the Ideal Tenure for Maximum Returns on FD Investments
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FDs offer a choice of tenure options and the option selected determines the interest rate. Here’s how to choose the right tenure for the best returns.
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Think long-term
Usually, FDs with longer tenures offer higher rates than shorter tenures. So, if you have a long-term horizon, you should invest in long-term FDs.
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Look for special schemes
Banks usually offer special FD schemes for special tenures. Such schemes carry higher interest rates even with shorter tenures.
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The laddering strategy
By investing in multiple FDs with different tenures, you can maintain liquidity and reinvest the maturing short-term FDs.
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Let’s say you have a 5-year horizon. You invest in five FDs for 1,2,3,4 and 5 years. From next year, the FDs will mature annually.
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Since you have a 5-year horizon, you can reinvest the first four maturing FDs. Your returns will grow through compounding, allowing you to maximize your earnings.
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IDFC FIRST Bank Fixed Deposits offer attractive interest and tenures ranging from 7 days to 10 years. Pick the right tenure for maximum returns.