Few Basic Facts About Fixed Deposits In India
A Fixed deposit in India is an age-old financial product. This is one product that people rarely optimize from a long term investment point of view. In spite of being an effective investment tool, a lot of investors are not well-informed about the opening and maintaining a fixed deposit account in India. So, here are few key facts that will help you along the way.
The type of fixed deposits
You can invest in fixed deposits through banks, post-offices or companies. Though most of the people know about a bank’s fixed deposit accounts, all are not aware about the company fixed deposits, which offer much better interest rates too. Each bank and company has different policies about maturity and premature withdrawals; however, you shouldbe aware about these details when you invest.
The income tax on fixed deposit schemes
Fixed deposit schemes are known as taxable since the TDS (Tax Deducted at Source) is applicable on theseschemes. For the most part, this is a known fact. However, what most people don’t realize is that if the total sum of interest in a particular branch is lower than Rs. 10,000, there is no TDS applicable. Hence, you can escape the TDS by ensuring that you don’t earn an interest of more than 10, 000 on your fixed deposit, for a particular financial year.
The returns on a fixed deposit
As a financial tool, the return on investment (ROI) on a FD is very important. The investors are aware about the interest rates on ideal fixed deposits . Although, they are not aware about the competitive rates that several banks offer nor do they know about the different types of returns.Different organizations offer different rates to encourage investors,whilstproviding monthly, quarterly and annualgrowth option for the interest. This can be used strategically as you can increase your returnsby reinvesting the monthly returns in a recurring deposit or a monthly systematic investment plan (SIP).
If you have discovered any new facts about fixed deposits while reading this piece, you will be surprised to know that there is still much more to know and understand. You cannot overlook this kind of information as it is vital to your investment strategy per se. Even if you are investing in the most basic FD, you must stay informed about these kinds of details that may help you in the months to come to form a better investment plan.
