Economic uncertainty is always a possibility that should be considered when planning your finances for the future. However, no matter how well-laid your plans might be, there is always scope to make investment choices that are risk-free while helping you grow your hard-earned money for the long term. One such effective investment option that is popular among investors of all ages and backgrounds is fixed deposits or FDs.
Here are some of the reasons why FDs are popular and the benefits of fixed deposits that make them dependable options for uncertain times:
Your Investments are Protected From Market Risk
Given the economically uncertain times that we live in, the one thing we need from our investments above all else is security and steadiness. Given the frequent fluctuations that financial markets experience during difficult times, this is not always possible with market-linked investment options. However, the benefit of fixed deposits is that you are assured with the promise of guaranteed returns that are unaffected by the uncertainties of the market, no matter the circumstance. This is a valuable benefit of fixed deposit to have when you are looking to grow your money without exposing yourself to volatile market risks.
Provide Flexibility in Investment
There was a time when fixed deposits were structured in a way that made them a rigid and inflexible investment option. However, the benefit of fixed deposits offered by banks and financial institutions in the industry today are geared towards providing as much flexibility as possible to the investor. They offer a variety of choices in terms of tenure, ranging from as low as a few days to as high as 20 years, as well as a choice of deposit amounts. When times are looking financially uncertain and you need to safely park your money over different periods of time, fixed deposits can offer you the flexibility and convenience of investment that you seek.
Ideal to Include in Emergency Fund
There is nothing that comes to your rescue during an uncertain economic period like a well-planned emergency fund. When payments are delayed and bills start stacking up, a good emergency fund can provide you with the financial fuel to stay on the right track. However, emergency funds should be composed of more than just cash and money parked in a savings account – it should also include an option with which it can grow with time. With the security and the steady money growth opportunities that fixed deposits provide, they are an ideal investment for you to save for a rainy day, whenever that day may be.
Benefit Your Tax Saving Efforts
Even if the economy becomes uncertain and your paychecks are impacted, it will always be important to be prepared for tax season right around the corner. Therefore, it is important to make crucial investment choices that are safe, help grow your money, and also provide tax benefits. All of these criteria, including the last one, are met by fixed deposits. Earned interest of up to Rs. 40,000 on regular fixed deposits is tax-exempt under Section 80TTA. This tax-exempt limit can be up to Rs. 50,000 for senior citizens. What’s more, you can also invest in specific tax-saving fixed deposits to serve your purpose, and avail tax deduction of up to Rs. 1.5 lakh under Section 80C.
Can Be Used To Avail Loans
Finally, one of the benefits of fixed deposits that can help you bridge any financial gaps during uncertain times, is that you can avail a loan against your FD. This loan amount can be as much as 90% of your deposit amount and be paid back in tenures of up to 5 years. Also, since the fixed deposit itself is considered collateral for the loan, you do not have to pledge any of your prized possessions to avail this loan.
So, in these uncertain times, if you are looking for an investment option that will assuage your financial worries instead of raising them, look no further than the reliable fixed deposits in the market.
To get started, make sure that the financial institution with which you open an FD is one of repute and offers various unique advantages. To that end, consider RBL Bank that has more than 9.08 million trusted customers nationwide and allows you to make the most of the benefits of fixed deposits. What’s more, RBL Bank also offers a wide range of financial services that can help meet your every short-term and long-term requirement with ease.