Investing in FD has always been considered as a safe and guaranteed return option, but it is not rational given the rising inflation. There is no doubt that FD is a good investment option in many ways, but it also has some disadvantages, knowing which an investor should do FD.
New Delhi. Most of the investors consider investing money in FD as the safest and better investment option. To some extent this is also true, but FD is completely profitable, this is also not true. There are many advantages to investing in FD and there are also some disadvantages.
At present, all private and government banks are increasing the interest rates on their FDs, so that it looks more attractive to the investors. Despite this increase, the returns on FDs appear to be quite low as compared to other investment options. That is, getting low returns is the biggest disadvantage of investing in FD. Instead, you can invest in corporate FDs, bonds or other options.
Liquidity problem
The other downside about FDs is its liquidity. This means that you do not get the money back at the time of need. Once you have made an FD in the bank, then its maturity time also gets fixed. You cannot withdraw your money before that stipulated time if required and if you do so, you will be charged more than the return.
Some banks may charge you up to 1 percent for early withdrawal from FD. In such a situation, the higher your deposit amount, the more will be the charge on it. Therefore, you should do many FDs in the form of small amount, so that only the FD of lesser amount can be broken if needed.
Tax benefits are also limited
It is very important for investors to know that not all types of FDs offer tax benefits. However, on some FDs with a tenure of 5 years, you are given the benefit of tax, but you have to pay some amount as TDS if you get more than a limit on this. On the contrary, if you want, you can take advantage of tax by investing money in bonds or National Savings Certificates, etc.
FD also has many advantages
The biggest advantage of getting an FD is that your money becomes safe for a fixed time, on which there is no effect of market fluctuations and fixed returns are available.
While making an FD, you get a lot of options to choose the tenure. For this, the option of tenure ranging from 7 days to 10 years is available.
Breaking the FD at the time of need is not the only option, but you can also take a loan of up to 90% of your FD amount.
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