Fixed Deposit vs Investment Bond
Choosing between investing in a fixed deposit or an investment bond requires careful deliberation, and evaluation of the advantages and disadvantages of both these investment vehicles. The success of any investment tool ultimately depends on how well it meets your requirements.
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Both fixed deposit and investment bond involve saving a certain amount of money for a fixed period. While FD interest rates are much higher than investment bonds, investment bonds offer more tax benefits.
To understand the difference better, take a look at the details of each investment option.
Features and Benefits of Fixed Deposit
For those looking to grow their savings in a safe investment avenue, Fixed Deposit is a preferred avenue. Here’s a look at its features and benefits:
- They provide incredible growth and maturity to your savings without being affected by market fluctuations.
- FD is an ideal option for senior citizens, who can also benefit from higher interest rates.
- FDs are issued by banks, NBFCs and post offices. If you’re looking for a strong balance of safety and returns, it is best to choose FDs issued by institutions with high safety ratings, which makes them a credible investment option.
- Fixed deposit enables you to meet urgent cash needs, with facilities such as loan against FD.
- They can help you earn more from your savings as compared to a savings account.
- FD enables you to choose the frequency of returns. For example, if you want monthly returns you can apply for a non-cumulative fixed deposit, whereas to receive lumpsum interest, you can apply for a cumulative fixed deposit.
- 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.
Features and Benefits of Investment Bond
Investment bond is also a great option for those looking to reap tax benefits and grow their savings. Read on to know more.
- These bonds provide a scope for capital appreciation, so you can make substantial financial gains.
- The interest rate on these bonds is much lower than that offered by fixed deposits.
- 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.
- These bonds can be sold to another party later on.
- Investment bonds may or may not have flexible tenors.
- 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.
- 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.
To sum up, here’s a table detailing the differences between these two investment options:
|Safety of deposit
||Safety of deposit is high, when you choose a credible issuer with high safety ratings
||Bonds are secure, but there are risks of bonds going unpaid
|Frequency of payouts
||The returns on your deposit are paid out monthly, quarterly, half-yearly, annually or at maturity – as per investor’s choice
||The returns on your bonds are paid out annually, or you can get them on a cumulative basis
||Credit ratings are mandatory for NBFCs
||Issuers need to get the instrument rated by at least one agency
||As per investor’s tax slab
||Only tax-free bonds are not taxable; others are taxed as per investor’s tax slab
So, if you seek an investment option that is secure and gives assured returns, a fixed deposit is an ideal investment option. For those looking to grow their savings in a safe avenue, Bajaj Finance Fixed Deposit is a great option.
Here’s what makes a Bajaj Finance FD a preferred option to grow your savings:
- Highest safety ratings of FAAA by CRISIL and MAAA by ICRA
- Lucrative interest rates of up to 6.50%, which can go up to 6.60% on investing online and up to 6.75% for senior citizens
- Flexible tenors ranging from 12 to 60 months, with option to receive payouts periodically or at maturity
- End-to-end paperless online FD process to enable you to invest from the comfort of your home
- Monthly savings option with Systematic Deposit Plan that enables you to save with just Rs. 5000 per month and grow your savings easily
By investing in a Fixed Deposit, you can get assured returns without any effect of market forces. Make a smart investment choice with Bajaj Finance online FD and reap an additional rate benefit of 0.10% by investing online (not applicable for senior citizens).