Fixed deposits and investment bonds each have their benefits. It is important for you to closely examine the advantages and features of both before making a decision. Ultimately, the success of any investment tool will depend entirely on how well it meets your requirements.
Debating investment bonds and fixed deposits isn't of much help unless you evaluate the benefits and features of each. Fixed deposits involve saving a certain amount of money in an account for a fixed tenor. Investment bonds are similar to fixed deposits in this sense. This is because they too involve investing a sum of money for a stipulated time frame. The factor that distinguishes the two is that investment bonds offer tax benefits. Additionally, FD interest rates are much higher than investment bonds.
To understand the difference better, take a look at the details of each investment option.
Here are Some Benefits and Features of Fixed Deposits:
1. They provide incredible growth and maturity to your savings without being affected by market fluctuations. The rates of return go as high as 8.10%.
2. They are an ideal option for senior citizens as they are short-term investments.
3. They are issued by institutions with appropriate ratings, making them a credible investment option.
4. A fixed deposit can be liquidated any time you desire. Thus, you will always be able to raise cash in case of emergency.
5. They can help you earn more from your savings as compared to a savings account.
6. FDs let you choose the frequency of returns. For example, if you want monthly returns you can apply for a non-cumulative fixed deposit, whereas to receive lump sum interest you can apply for a cumulative fixed deposit.
7. They feature flexible tenors. This means that you can choose a period that is most suitable to your financial plan.
8. The returns from fixed deposits can be used for a range of purposes like financing a holiday, purchasing an asset or even funding your child’s education. (Check: Fixed Deposit Schemes for Child Future)
9. You can take a loan against your FD.
Now, Take a Look at the Benefits and Attributes of Investment Bonds:
1. These bonds provide a high scope for capital appreciation. This means that you can make substantial financial gains.
2. The interest rate on these bonds is much lower than that offered by fixed deposits.
3. The returns from investment bonds aren’t subject to TDS or even tax. This means that you can keep most of your income from the interest gains without having to plan for tax deductions.
4. These bonds can be sold to another party later on.
5. Investment bonds may or may not have flexible tenors.
6. These bonds do not let you choose the frequency of your returns. There is a fixed time pertaining to when your returns will be paid to you.
7. Bonds are secured but not insured. This means that you do not have absolute safety. In case a bond goes unpaid, you only have rights over the assets submitted as collateral.
So, if you seek an investment option that is secure and gives assured returns, a fixed deposit is a fool proof investment option. No matter which type of fixed deposit you choose, you are certain that it is free from market fluctuations. Moreover, while FDs provide you interest gains of up to 8.10%, investment bonds only provide interest up to 7.76%.
If this list of features and benefits has you leaning towards an FD, explore Bajaj Finance's FD (Fixed Deposits). They offer an excellent rate of interest along with an easy and convenient application process. Additionally, it gives you the option to invest as little as Rs.25, 000.
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