What is a Regular FD?
A Regular Fixed Deposit (FD) is a financial instrument provided by banks which provides investors a higher rate of interest than a regular savings account, until the given maturity date. Money is locked in for a fixed period at a fixed interest rate.
Pro Tip: Re-investing your interest (Cumulative FD) can significantly boost your total returns due to the power of compounding.
Why Invest in a Regular FD?
- Guaranteed Returns: Unlike mutual funds or stocks, your returns do not fluctuate with the market.
- High Capital Safety: Insured up to ₹5 lakh by DICGC per bank.
- Loan Against FD: You can take a secure loan up to 90% of your FD value without breaking it.
- Liquidity: Premature withdrawal is allowed during emergencies, usually with a 0.5% - 1% penalty.
How to Invest?
- Net Banking/App: Log into your bank's app and open it instantly under the deposits section.
- Branch Visit: Fill out a form at your local bank branch if you prefer offline methods.
- Determine Tenure: Check the bank's interest table and pick the tenure that gives the optimal rate.