Start Small but Start Early with Fixed Deposits
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Start Small but Start Early with Fixed Deposits

  • Highlights

  • Choose a lender offering highest returns

  • Benefits of laddering your FDs

  • Earn higher returns by capitalising interest

  • Enjoy tax deductions on FDs

A fixed deposit is a safe investment option that enables you to take full benefit of compounded interest over time. No matter how small your initial investment, you will earn high returns over time, so start early and multiply your wealth. Here are some features of FDs that you should know about.

Best returns without risk

FDs are risk-free investments that offer guaranteed returns despite market fluctuations. Generally, NBFCs offer better returns than bank FDs. Go with a lender who offers the highest safety as well as the best returns. Consider the Bajaj Finance Fixed Deposit which offers highest interest rates. This FD also has a high credibility with ICRA’s MAAA (stable) and CRISIL’s FAAA/Stable rating. Secure and with higher-than-industry returns, this may be your ideal lender.

Flexibility to spread your investments

Fixed deposit investments can be made for any amount. Instead of one FD, it is advisable to ladder your investments. This means starting a series of FD that mature at different times. This way you can reinvest them if you don’t need the money at maturity and can withdraw a few to cater to your goals. Also, in case you require money for an emergency, you can liquidate a few FDs and continue to earn interest on the others. When you renew your FD, you may be eligible to earn a high rate of return.

Benefits of renewing Fixed Deposit

Additional Read : Should you invest in Stock Market or Fixed Deposits?

Higher returns without withdrawal of interest

When you start investing in fixed deposits early in your life, while you are salaried, you do not require the interest earned to meet daily expenses. So, invest in cumulative FDs that allow your interest to compound. For example, say you invest Rs. 1,000 in a fixed deposit for a period of one year at an interest of 10%. At the end of the year, your investment would grow to Rs. 1,100 (Rs. 1000 principal + Rs. 100 interest). Continue this investment for another year at 10% interest and your investment will grow to Rs. 1,210 (Rs. 1,100 principal + Rs. 110 interest earned at 10%). The Rs. 10 extra that you earn is the interest on the Rs. 100 interest earned in the first year. In this way, you can multiply your wealth with the power of compounding.

Additional Read : How to earn more from your fixed deposit?

5 Reasons to invest in Fixed Deposits

Tax deductions can reduce your tax liability

With bank FDs, you can enjoy a tax benefit up to interest earnings of Rs. 10,000 and on company FDs, earnings up to Rs. 5000 are tax-free. When you invest in a 5-year tax-saving FD, your principal investment is tax-free up to Rs. 1,50,000. So, you can enjoy tax savings when you choose an FD.


Keeping these benefits in mind, invest in an FD early on and protect your earnings from market fluctuations. Considered the safest form of investment, fixed deposits will help you build your wealth by giving high returns.

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