How to Maximise the Returns on Your Fixed Deposit?

A fixed deposit is a safe mode of investment, as returns are guaranteed. Another benefit of this investment is that you can avail loans of up to 75% of your FD’s value. Also, since FDs have a fixed interest rate, you know just how much money you will earn when it matures. While the interest rate varies from institution to institution, here are 5 ways to maximise your FD returns:

Invest in a company FD rather than a bank FD

Company fixed deposits generally have assured returns that are 1% to 3% higher than the interest rates offered by banks for similar periods.

For instance, the Bajaj Finance Fixed Deposit offers higher interest rates, with flexible tenor to suit your financial goals. You can also look for more benefits such as:

Assured returns

Higher interest rates for senior citizens

Easy online application and accessibility

Also, many companies offer FD schemes with an option to receive interest at monthly or quarterly intervals.

Compare FD interest rates across companies

Even amongst company FDs, each lender will offer you a different rate of interest. Your goal must be to choose one that gives you the highest return on your investment corpus. To ensure this, it is important you choose a fixed deposit only after you compare various FDs in the market. Company FDs also come with ratings by institutions such as CRISIL. So, apart from a high interest, choose a company FD with a high safety rating.

Choose cumulative FD for higher returns

Non-cumulative FD schemes pay interest on monthly, quarterly, half-yearly or annual basis. This scheme is better for pensioners, who need periodic payouts. Cumulative fixed deposit schemes, on the other hand, compound the interest. As a result, you can get higher returns at the time of maturity. So, if you’re focusing on maximising your wealth, a cumulative FD is better suited to your needs.

Invest in a short-term FD to beat inflation

Historically, there has been a co-relation between inflation and interest rates—as inflation rises, interest rates follow. So, investing in a short-term FD is better than a long-term one if your goal is to get returns that beat inflation. This also holds true if you are investing with the aim of creating wealth.

Additional Read : Where to invest for higher returns on your fixed deposit

Invest in multiple FD schemes to improve liquidity

Spreading your investments across different fixed deposits can help you gain consistent returns and liquidity, at the same time. To ensure maximum returns from your investment, build a ladder of FDs of different tenors. For example, if you have Rs. 5 lakh to invest, split the amount into five deposits of Rs. 1 lakh each for one, two, three, four and five years. Keep re-investing the maturity proceeds in the five-year FD. By building this ladder of FDs, the highs and lows in interest rates will balance out over a period. Additionally, you will enjoy liquidity because you will have one deposit maturing every year. By following these measures, you can maximise returns on your fixed deposits and grow your wealth.

Bajaj Finance is now offering high rate of interest up to 9.10%*

*For senior citizens, on a cumulative scheme tenor of 36-60 months