6 Common Mistakes to Avoid While Investing in FDs

Fixed deposits are quite safe, but rushing into investments might stop you from making the most money possible.

4 mins
06 September 2023

The lure of high interest rates and stability draws several investors towards fixed deposits, which are one of the most preferred low-risk investment alternatives. Though fixed deposits are devoid of risks, hasty investments may hamper your ability to maximise your gains from the investment.

Common investment mistakes fixed deposit investors must avoid.

Lack of investment goals

Having no prior investment goals before investing in a fixed deposit is like walking in a dark alley, without any sense of direction. Here’s why you need to be clear about your investment goals beforehand:

  • Select the right scheme, which is dovetailed with your investment plan
  • Align other saving plans along with your FD, so that you can have a diversified investment portfolio
  • You can decide which benefits of FD you want to capitalize on. Some of these benefits include:
  1. Liquidity
  2. Flexible tenor
  3. Short-term gains
  4. Fund for emergencies
  5. Stability
  • Optimize your savings in the right way
  • Increase your preparedness for future expenses

It is always important to have an objective so that you can plan cleverly for the future and select the right scheme. With Bajaj Finance FD you can get flexible tenor, high rates of interest and hassle-free documentation to make life easier for you.

Not performing relevant research

Investing in any scheme requires intensive study of the market and the various interest rates. Once you have extensively studied the market on a large scale, only then should you consider investing in FDs.
Research also helps you narrow down and choose an option according to your requirements. It enables you to compare various schemes and choose the correct ones. You can also read helpful investment guides or books, so you can plan your investments accordingly.

Choosing only a single option

A single investment is less likely to give you high amounts of returns so it is best to choose more than one scheme. Consider investing in other options as well, and have a diversified portfolio. In case you’re eyeing FD as your only investment vehicle, invest in FDs with different tenors. It will help you enjoy both – high returns from long-term FDs and quick, short-term gains.

Not monitoring and recording your investment

At every stage of the investment, it is important for you to have a clear record of the returns and the account details. Pay attention to your bank statements and passbook entries of the fixed deposit account.

Not considering inflation

Inflation is the rise in the rates of commodities and services. Inflation impacts the overall value of money over time. Hence, before investing, it is important to consider inflation and plan and invest a sum that is likely to be valuable in terms of the value of money after the tenor. You can also use Bajaj Finance FD Calculator, to help you calculate the accurate returns on your investments.

Investing in insurance simultaneously

No matter how many FDs or investment options you have, it is always necessary to keep aside an insurance policy, apart from investments. These policies help secure your family and loved ones in unforeseen events.
This way, in cases of emergency, you always have an insurance policy as a backup option. This will ensure that you do not have to break your deposits or other investments in case the urgent need for cash arises.

If you avoid these mistakes, it is likely that you could gain more rewards from your investment.

Frequently asked questions

What will happen if I break FD before maturity?

If you prematurely withdraw your fixed deposit before it reaches maturity, you will forfeit the interest income that was originally promised for the remaining duration of your FD. Additionally, you may incur a penalty ranging from 0.5% to 2% of your FD amount, depending on the timing of your withdrawal.

Can I break FD anytime?

Yes, you can break your FD at anytime, but you may incur a penalty ranging from 0.5% to 2% of your FD amount.

Can we do FD for 20 years?

Yes, you can open a Fixed Deposit (FD) for a duration of 20 years or even longer, depending on the terms and conditions offered by the bank or financial institution.

What is the minimum period for a fixed deposit?

The minimum period for a Fixed Deposit (FD) can vary from bank to bank and financial institution to institution. You can create an FD on Bajaj Finance platform with tenures ranging from 12 to 60 months.

How many FDs can one have?

There is generally no strict limit on the number of Fixed Deposits (FDs) one can have. You can open multiple FDs with the same or different banks or financial institutions based on your financial needs and goals. Each FD is considered a separate deposit with its own terms and conditions, including the deposit amount, tenure, and interest rate. Having multiple FDs can help you diversify your investments and manage your financial goals more effectively. However, it's essential to keep track of the maturity dates and terms of each FD to make informed financial decisions.

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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.