While investing, everyone thinks that he should get maximum returns. At the same time, his investment should also be safe. It is important to know some important things for good returns and safe investment.
FD: We often do not pay attention to some important things while investing in any scheme. Here are some important things to know about investing. Otherwise we miss out on getting more return on our investment. Today, FD remains a preferred investment option among mutual funds and investing in the fast growing stock market. Even though the interest rate on FD is low, it is considered to be the safest option for investment and savings.
Many types of tax benefits are also available from income tax on fix in the bank. So if you are investing in FD then you must know some basic things. These affect the return on your investment.
Period
Before investing on an FD, you should be clear about its tenure. Normally this period ranges from 7 days to 10 years. You choose this period keeping in mind your needs. If you break the FD prematurely, you may lose interest income.
Amount deposited
Keep in mind the minimum deposit amount. In SBI, this amount is 1 thousand rupees while in ICICI Bank 10 thousand rupees. HDFC Bank, has fixed its limit at Rs 5 thousand.
Interest rates
Different interest rates are available in FD according to the tenure. You should check these interest rates before starting a deposit. Usually senior citizens get 50 basis points additional interest.
Tax exemption
FD returns are taxable as per the income tax slab. If the interest income exceeds Rs 10,000, the bank can deduct TDS on it. If you do not want to deduct TDS, then you should submit the form 15G / H in the bank. There is no tax on FDs made in banks and post offices for five years.
Premature withdrawal
You can withdraw from the FD before the maturity period, but for this you may have to pay some amount as a fine. Normally it is between 1 to 1.5 per cent of some amount. Some banks do not charge any fine on withdrawals made after a certain period.
Payment options
You can withdraw the entire investment amount, including interest, after the maturity period. Also, there is an option to take it on monthly, quarterly, and yearly basis as well.
Loan facility
Overdraft can also be availed on FD. Also, loan is also available against FD. The amount of overdraft is less than the amount of FD, and the interest on it is higher. 90-95 per cent of the FD amount can be availed as a loan.
Automatic renewal
FD gets automatically renewed every year. Nowadays, almost all the banks are providing online facility for FD opening and automatic renewal.
Nominee facility
You can nominate any one person or more than one person on FD. Nominee should be registered before opening FD. Otherwise, if the depositor dies suddenly, his family may face difficulty in getting the FD amount.
The protection
This is also an important thing that should be kept in mind while investing. In which bank or in which scheme you are depositing money, it must be investigated. How safe is the institution or scheme where you are investing so that your hard earned money does not get drowned.
