If you are considering investing in a Fixed Deposit, you must already be wondering whether this will be a good option for you or not. There has been a long-running debate on whether FDs are the best investment options in comparison to other avenues like gold/silver and even real estate. However, to put things into perspective, FD investment can actually be good option if you take into account the fluctuating nature of other investments.
Gold, silver and other precious metals have always been one of the most preferred means for investment in India. However, the fluctuations in their prices can make investors rue their decisions at times! The demonetization drive has impacted the Indian economy hugely and several companies have already been grappling with losses while big-ticket investments have been put on hold. Due to a largely unstable market, the prices of precious metals are fluctuating and real estate prices have also corrected, thereby rendering such investments unfavorable at present, particularly with stringent taxation policies coming into the picture with GST.
Current Volatility of the Economy
Keeping in mind the current volatility of the economy, Fixed Deposits are the safest and best options. A fixed deposit account can be opened in any bank or NBFC across the country although interest rates vary from one lender to another. You should use an FD calculator online to find out your returns in terms of interest. Compare lenders based on interest rates and other terms and conditions and get the best possible deal for yourself. Fixed Deposits are great investment options wherein you deposit a lump sum amount with the lender and there is pre-fixed tenor and rate of interest. You also choose between periodic payouts of interest (monthly/quarterly/half-yearly/annually) or receive the entire amount at maturity.
Avoid TDS on Fixed Deposit
Indeed, interest income from fixed deposits is taxable. The income derived from an FD will be added to your own income. You can avoid TDS by filling out form 15H or 15G in case you are eligible or by opening FD accounts in different financial institutions. Fixed deposits sometimes have lock-in periods or maturity periods. This ranges between 7 days and 10 years and you should not withdraw money during this period since you will have to pay a penalty for the same. Also, you can invest in tax-saver FDs with fixed lock-in periods.
Investing in fixed deposits is also a smart move when it comes to getting necessary funding at short notice. You can avail of loans by keeping your FD as collateral. Lenders often provide loans to customers who do not wish to break their FDs before the tenor ends. 70-90% of the FD is usually provided as a loan.
With all these benefits and their completely risk-free nature, FDs are definitely the best investment options.