Fixed Deposit The importance of savings and investment in the life of an individual cannot be stressed enough. Every individual is likely to have a variety of goals with different timeframes. It is uncertain whether at such milestones the individual will have enough money to fulfil their goals. Investment helps save money to achieve goals slowly and steadily. It also teaches the importance of controlling one’s expenses and focusing on savings.
Individuals across backgrounds and professions have preferred Fixed Deposit schemes for several decades. Despite the deregulation of interest rates, they have remained tremendously popular with investors and savers.
Here are some of the factors which make a fixed deposit a preferred choice of investment:
FD is a Secured Investment Option:
One of the primary reasons why fixed deposit schemes retain their popularity is the security they provide to their investors. As opposed to market linked investment options, Fixed Deposits preserve the original capital that has been invested. This provides substantial peace of mind – especially for small investors, retirees and senior citizens.
Let Your Fixed Interest Compound:
Fixed Deposit allows the investors to have access to one of the greatest tools of the financial world in form of compounding. For investors who do not need regular interest withdrawal, a fixed deposit can provide great returns. The interest earned each year is added to the principal amount and the interest for next year is paid on such increased principal.
Create a Fixed Income Stream:
Fixed Deposit schemes offer the option of either re-investment or income to its holders. In the case of individuals who depend on the interest of their fixed deposits, fixed deposits provide various options for paying out interest. Such periods include monthly, quarterly, half-yearly, and yearly. Unlike dividends which might not be offered every year, fixed deposits provide a steady income stream for its subscribers and allow them to function in their routine.
Plan Your Retirement Easily:
Fixed Deposits are primarily used for achieving both short term and long term goals including purchasing a new vehicle or for arranging funds for education. Apart from the above, fixed deposits can also be used as a savings instrument for one’s retirement. The interest on the Fixed Deposits if invested at the proper time would have allowed replacing the salary or income earned before retirement. Investment in fixed deposits not only helps in building corpus but also living with an innate peace.
Fixed Deposits shouldn’t be perceived as an alternative to market linked instruments and instead should be considered as a reliable instrument which enables diversification of one’s financial portfolio. One must enquire regarding the best FD rates in your region and start investing in fixed deposits as early as possible. Thus, a Fixed Deposit scheme can provide and cater to all types of investors, and hence it remains a preferred choice for most people even today.