The Benefits Of a Good Fixed Deposit Scheme

When one invests, it could be for a host of reasons ranging from potential savings for securing your future, or just for funding your child’s education or saving for an overseas travel. The baseline for any investment made is profit. As far as investments and savings go, nothing combines the two as beautifully as a Fixed Deposit scheme does.

Like most investors, you’ve probably come across many schemes offering a good Fixed Deposit interest rate. So how do you zero in on one scheme?

There are a few key benefits of investing in an FD account, as there are with any sort of investment. However, the Fixed Deposit, if not approached with caution, can turn out to be a bit of a financial burden.

However, given the high FD interest rate, it’s not hard to see why a lot of people lean towards an FD account.

Working Around Tax Cuts

Every good investor knows that one of the biggest drawbacks of any Fixed Deposit account is the tax that is levied on them.

If you’re confused about this, you’re not alone. This can often be hard to work out if you’re only looking to make a profit. But if you understand Fixed Deposits, you can work with this tax situation, and actually make fix deposit tax benefits work for you!

However, there is a concession here as well. There really can be such a thing as a Fixed Deposit tax saving. According to the tax laws, if your interest amount exceeds Rs.10,000, only then are you eligible for TDS, which is Tax Deducted at Source. Even then, there are various provisions you can make in order to evade this tax. We take a look at a few here.

• Do Your Homework (research)

This is clearly the best thing you can do, and one that is entirely under your control. When deciding upon what scheme you want to opt for, it’s only sensible that you look carefully at your options.

At the same time, don’t forget to keep a watchful eye on your tenure.

You will find that there are many interest rates you can pick from, since different lenders tend to offer different plans. You can also decide upon your interest rates once you have the tenure in place; you can pick between monthly, quarterly, half-yearly, yearly, or at the time of maturity.

Remember, you should be going for the highest feasible interest rate.

• Save on Taxes By Splitting Your Investments

This is one of the classic tried-and-tested ways of avoiding pesky TDS. Note, though, that it can take up quite the amount from your overall interest earning. You can prevent this from happening, by simply dividing your premium amount among multiple FDs in various banks, NBFCs, and financial corporations.

This will require more research, but is ultimately worth it.

This way, if you require funds or cash in an emergency, you won’t have to break your entire FDs. You can simply break the one with the lowest interest rate, and still continue claiming interest on the remaining accounts.

Considering everything, always be on the lookout for a scheme here or an opportunity elsewhere that offers better returns. Bajaj Finserv, for example, has an offer that allows you to go TDS-free on interest payments that go upwards of Rs.5000 yearly.

Finding a Fixed Deposit scheme that works for you shouldn’t be so hard, if you have the right tools and are constantly on the lookout. Fixed Deposit interest rates are constantly changing; if you catch the right one, you’ll reap amazing benefits.