Choosing between investing in fixed deposits or investment bonds 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. Here’s a brief lowdown to help you understand fixed deposits and investment bonds better.
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. While FD interest rates are much higher than investment bonds, investment bonds offer more tax benefits.
TTo 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.
2. They are an ideal option for senior citizens, who can also benefit from higher interest rates.
3. FDs are issued by institutions with appropriate ratings, making them a credible investment option.
4. Fixed depositsenable you to meet urgent cash needs, with facilities such as loan against FD.
5. They can help you earn more from your savings as compared to a savings account.
6. FDs enable 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.
7. 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 Futurea>)
Now, Take a Look at the Benefits and Attributes of Investment Bonds:
1. These bonds provide a scope for capital appreciation, so 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 an ideal investment option. No matter which type of fixed deposit you choose, you can expect assured returns, without any impact of market forces.
You can also look for a suite of different benefits of investing in Bajaj Finance FD (Fixed Deposits). Get excellent rate of interest along with an easy and convenient application process. Additionally, you can start investing with just Rs.25, 000.