When is the right time to invest in a fixed deposit?
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When is the right time to invest in a fixed deposit?

  • Highlights

  • Take current income into consideration

  • Make a note of taxable income and tax deductions

  • Research on the different kinds of FDs before investing

  • Use laddering for higher returns and flexibility

Timely investments in fixed deposits are an efficient way of boosting your savings. Unlike a regular savings account, a fixed deposit secures your money and helps you earn higher returns. You can start a fixed deposit with a bank, corporate institution, NBFC or even a post office. But, to ensure that you make the most of this investment option, it is important to determine the right time to invest. Here is what you need to keep in mind before you go ahead with your investment.

Consider your current income

Before you decide on the amount you want to invest, it is crucial to assess your current income. If most of your income is being used to pay off bills, you will first need to accumulate the funds you wish to invest. Instead of immediately deducting the amount from your current income, plan ahead and keep aside a part of your income every month, until you’ve accumulated your desired amount.

Be aware of taxable income

The interest earned on a fixed deposit is not tax-free and when received, it is adjusted for tax. Tax is applied to annual interest earned above Rs.10,000. It is thus important to be aware of the taxation policies before investing.

Do your research

It is always wise to do your own research before you go ahead and invest. Keep an eye on interest rates which will help you understand when they’re high and low. You can thus avoid investing at a lower rate of interest. When the rates are high, invest heavier amounts for a longer period of time. Also bear in mind that NBFCs offer better interest rates than banks. For instance, the Bajaj Finance Fixed Deposit offers an interest rate of 7.85% to 8.20% in addition to other benefits such as high credibility and an easy online application process.


Why should you choose Bajaj Finance Fixed Deposits?

Make the most of laddering

Interest rates are subject to frequent changing. Wondering if your investment will be stuck at a lower rate of interest can make you apprehensive about investing. Laddering is the ideal solution to such a situation. By investing your savings in FDs of different tenors, you prevent a large amount of your savings from being trapped for a longer tenor with a lower rate of interest. By laddering, you can reinvest your short-term investments when the interest rate rises.


Tips to manage multiple FD's


This method also allows you to enjoy flexibility in case you need to liquidate your FD for an emergency. By liquidating only the amount that you need, the bulk of your investment stays safe and you can continue to earn interest.


So, before you decide to invest your savings, make sure that you’re well aware about factors like interest rates and taxation policies, so that you can invest wisely and get the most out of your fixed deposit.

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