As the result of prolonged stagnation in the markets equity investments would yield better gains only if they are held for a longer duration. In this time Fixed deposits (FDs) and other fixed investment options may not give you high post-tax returns but are useful tools in earning assured returns. Investors with a one or two year horizon can opt for FDs
Benefits of Fixed Deposits
- Tenures, ranging from 7 days to 10 years, to suit your investment plan.
- Partial withdrawal is permitted in units of Rs 1,000. The balance amount earns the original rate of interest.
- Auto renewal is provided.
- Easily available fixed deposit receipt
- Loan facility is available up to 90% of principal and accrued interest. By using the fixed deposit as collateral for the loan you can get a loan at lower rates.
Institutions which offer fixed deposit option
Apart from banks (public sector banks, private sector banks as well as co-operative banks) , other institutions are also offering fixed deposit investment options for investors. The deposit rates depend upon the financial position of the bank and the conditions that impact the fund raising capacity of the institution.
Types of Fixed Deposit Schemes
- Traditional scheme: In this scheme, the interest on the FD account is credited to the Savings account on a monthly basis or on a quarterly basis.
- Reinvestment scheme: In this scheme, the interest is compounded to the principal amount on a quarterly basis.
Tax is deducted at source, from the interest on Fixed Deposits, as applicable, as per the Income Tax Act, 1961.
Documentation required to open Fixed Deposit Account
- PAN card
- Voter ID card
- Driving licence
- Government ID card
- Photo ration card
- Senior citizen ID card
Address proof :
- Telephone bill
- Electricity bill
- Bank Statement with Cheque
- Certificate/ ID card issued by Post office