Fixed Deposit: It is not right to invest in FD without thinking. Despite being a safe means of investment, ignoring some things in the case of fixed deposit can prove to be harmful for you.
Fixed Deposit has been a favorite means of investment for years. Even today many people like to include FD in their portfolio. But if you are investing in FD without thinking, then this is also not right. Ignoring some things can prove to be harmful for you. Here know the 5 things which should be kept in mind while making FD.
Do not invest money in a single FD
If you want to invest a large amount, then do not invest it in a single FD. Invest it in FDs of different tenures. For example, suppose you want to invest Rs 5 lakh, then instead of investing it all in a single FD, it is better to get 5 FDs of Rs 1 lakh each for different tenures. In this way, you will have liquidity and will also be able to take advantage of better interest rates.
You can do FD in private sector or small finance bank
The purpose of investing is to get maximum benefit. For this, it is not necessary that you make FD in a government bank only. You will get maximum interest of 6 to 7 percent in a government bank. In such a situation, for more benefit, you can also look for options in private sector or small finance banks. Here you can get better interest.
Income tax rules
You should be aware that the income earned on your FD is also taxed according to the income tax slab. If the interest earned on FD is more than Rs 10,000 in a financial year, then TDS deduction is done on that interest. This will be 10% of the total interest earned. For senior citizens, this limit is 50 thousand. However, if your income is less than the taxable range, then you can submit Form 15G and Form 15H to the bank to avoid TDS deduction on FD.
Think about tenure
If you are going to make only one FD, then be clear about the tenure beforehand. If you have made a long term FD and have to break it in between when you need money, then you will have to pay a penalty. To avoid this, think well about the tenure before making an FD.
Higher interest for senior citizens
Senior citizens are given .50% more interest on FDs. Banks also give 1% more interest on some special FDs. In such a situation, you can avail the benefit of higher interest by making FD in the name of senior citizens.
