The Right Time, Strategy And Amount For Investing In Fixed Deposit Schemes

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    May 02, 2014
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The Right Time, Strategy And Amount For Investing In Fixed Deposit Schemes Photo by Aishwarya Mahurkar

There is a right time to invest in fixed deposits. There is a right strategy and right amount to invest in FDs too. Both of these will depend on your financial situation though. Yet, there is a way to optimize it under normal circumstances. Hence, you should always consider before investing in fixed deposits.

When is the right time?

When high risk investment tools are too volatile, invest in FDs. There are multiple reasons for this kind of an action plan. Local events and international low cues can send the stock market and the mutual funds stumbling down. This is the time to invest in safe tools like fixed deposits. Do not risk your funds in such challenging times.

What is the right strategy?

Today’ fixed deposit market is highly competitive. The right strategy for a FD, ideally, is to optimize all the important aspects of a fixed deposit scheme . You need to understand them and optimize them as per your financial priority. These important aspects are:

• Interest – This is the most important one. Yet, there are cases where people prefer to open a fixed deposit account  without the highest interest because of the priorities mentioned below.

• Premature withdrawal penalty – This is an expense most of us will like to avoid. If you can need the invested funds again, you must invest in the organization that offers no or low penalty.

• Return strategy - The available options are monthly, quarterly, annual interest payment or reinvestment option. The most suitable choice for your requirement should be available.

• Overdraft facility - Most business owners look for a fixed deposit with this facility. It allows them to enjoy the returns and use it as collateral in troublesome times.

• Convenience - Most people prefer to invest with their retail banking partner. However, today, nationalized and private banks allow customers to open a fixed deposit account through the online medium, which is the most convenient and rewarding choice for busy people.

What is the right amount?

The Reserve Bank of India  (RBI) mandates that nationalized and private banks must insure all the fixed deposits up to Rs. 1,00,000/. If you invest Rs. 2 lakh, you are insured up to 50% of your amount. If you invest Rs. 1, 00,000 in two different banks, you are insured 100%. If you want to invest in this popular and safe financial product, the right amount is in multiples of Rs. 1, 00,000. This strategy lowers the risk and helps retain the returns.

Author's Profile

An experienced writer on finance topics, the author articulates of investment choices such as aspects of a fixed deposit scheme & recurring deposit schemes. She writes about a variety of topics including the benefits of recurring & open a fixed deposit account and how to make the right investment choice.

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