Fixed deposit programs are popular money investment programs which are being used by people since a long time. People prefer to keep their money in fixed deposit schemes simply because of the fact that they are safe and guarantee security. Fixed deposit programs are financial tools which are offered by the government. These programs enable the government banks and financial institutions to lend money on loan to people in the market.
However, what people may not know is that not all fixed deposit programs are safe and secure. Many a times there are schemes which do not give good returns, in which case the person might feel that he or she has wasted time needlessly on the investment program. It certainly is discouraging to face the reality of a situation in which you have vested so much of time, money and patience. Therefore, keep these guidelines in mind before approaching any bank or financial institution for opening a fixed deposit account.
- The fixed deposit schemes that are offered by public sector banks are much safer as compared to the private financial companies. The risk is less and you do not need to worry about your returns. However, the terms and conditions involved in a government bank are far more rigid than any private company.
- Public lenders offer fixed deposit plans which help you to save tax. The schemes offered by private companies do not always help you get a tax exemption.
- Fixed deposit plans are always beneficial if you invest a large amount of money. Also, you must try to get reasonable interest rates, which will actually make your initial capital grow. If you have chosen a private financial company just because of the lucrative interest rates of its FD plan, exercise some caution. Research about the company well before investing your money into any of its program. If the company is in debt or is not performing well as per industry standards, your money might be at a huge risk which would make returns bleak.
- Money which is put into a fixed deposit account is locked for a stipulated period of time. You cannot withdraw the money from your account before the date of maturity. If you do choose to withdraw your money, the bank or the lender will charge you penalty amount. Usually, people do not try to withdraw money before the date of maturity.
- The interest is levied annually or quarterly on the initial capital, which you have put into the fixed deposit account. You can also withdraw the interest money at the interval of three months. In a way, it would become a source of income. But, what people do not know is that they would have to pay tax if they are withdrawing the interest money. You get tax exemption only if the interest keeps getting added to your money.
- FD programs require a lot of patience and time. They only yield good results when invested for a long period of time. Therefore, if you are looking for quick money and short term gain, do not invest in fixed deposits.
A passioante writer on finance topics. Get the best fixed deposit interest rates with Bajaj Finserv.