How to Maximise Your Returns from Fixed Deposit (FD)

Learn more about how to earn amazing returns on your FD and what to do before investing in Fixed Deposit.
3 mins
18 August 2023

How to Get Higher Return on Fixed Deposits

A fixed deposit offers consistent returns and stability of funds over a predetermined period. When you choose a fixed deposit with a higher interest rate, you can quickly boost your returns.

For those looking to maximise their returns with a fixed deposit, here are a few steps to undertake:

Plan your investment strategy

Investing in FD alone is not enough to gain high returns, as you need to know how to manage your deposit well. Once your deposit reaches maturity, you can consider re-investing, especially as many financial institutions offer higher FD interest rates on renewing investments. Bajaj Finance also provides an auto-renewal facility, so you can choose to continue your deposits while you’re booking them.

File your returns on time

It is essential to file your returns on time and be aware of the latest changes or modifications in the tax laws for FD returns. You can also avail of tax exemptions if you file your returns with Forms 15H or 15G. If you fall in a low-income bracket, you can also receive a tax exemption.

Ladder your FDs for liquidity and tax benefits

Make the best use of your funds by dividing a single corpus over multiple FDs with different tenures. This approach can help you see your fixed deposits as a financial backup, which help you fulfil your financial requirements with ease. It also enables you to gain tax benefits with multiple maturity dates.

Choose cumulative FD for funding long-term goals

Cumulative FD enables you to grow your corpus over the tenure as you get extended benefits of compounding interest. However, non-cumulative FD helps you gain regular payouts, making them best-suited for retired individuals seeking periodic income.

The FD laddering strategy

FD laddering is a method in which an investor divides their money among a number of FDs with various terms and interest rates, resulting in a "ladder" of maturity dates. This makes it possible to reinvest at hypothetical future interest rates that are greater while also providing regular liquidity.

FD laddering helps in getting the maximum out of your investment as you always have an upper hand in terms of liquidity, latest rates and minimises the impact of interest rate fluctuations and provides a balanced approach.
To maximise the FD laddering approach, follow these steps:

  1. Observe Interest Rate patterns: To spot opportunities to reinvest at higher rates, keep an eye on interest rate forecasts and patterns.
  2. Reinvest Maturities: To potentially earn better returns, reinvest the profits of each maturing FD into the new FD with the longest tenure in the ladder.
  3. Liquidity Needs: Before using the FD laddering method, evaluate your liquidity needs and financial objectives. If you require more liquidity, put more money in short-term fixed-income securities, and vice versa.

These simple steps can go a long way in helping you maximise gains from your FD. You can invest in Bajaj Finance Fixed Deposit for better returns that help you grow your corpus. You can choose your tenure, avail periodic payouts, and above all, earn higher interest. If you’re planning to calculate your maturity amount before investing, consider using the FD return calculator and book your FD today, with an end-to-end online procedure.

Key Benefits of Fixed Deposits

Here are some key benefits of fixed deposits:

  1. Guaranteed returns: Fixed deposits offer guaranteed returns, which means that you know exactly how much you will earn on your investment.
  2. Low risk: Fixed deposits are low-risk investments as they are not subject to market fluctuations.
  3. Flexible tenures: Fixed deposits offer flexible tenures, which means that you can choose the duration of your investment based on your financial goals.
  4. Easy to open: Fixed deposits are easy to open, and you can do so with a minimal amount of documentation.
  5. High liquidity: Fixed deposits are highly liquid investments, which means that you can easily withdraw your funds in case of an emergency, do remember that a paneity might be levied in case of premature FD withdrawal.

Tips to Maximise Your Returns on Fixed Deposits

Here are some tips to maximise your returns on fixed deposits:

  1. Look for higher interest rates: Interest rates offered by different FD providers might vary, and investors should compare rates offered by different banks to identify the one offering the highest rate.
  2. Opt for longer tenures: Generally, longer tenures offer higher interest rates as banks prefer to lock in funds for a longer duration.
  3. Invest in cumulative FDs: In cumulative FDs, the interest earned is reinvested along with the principal amount, leading to a higher rate of return at the end of the tenure.
  4. Diversify your portfolio: Diversifying your portfolio by investing in multiple fixed deposits can help reduce risk and maximise returns.
  5. Stay informed about interest rate changes: Interest rates on fixed deposits change from time to time, and it’s important to stay informed about these changes to maximise your returns.
  6. Choose the right FD type: Choosing the right type of fixed deposit based on your financial goals and investment horizon can help maximize your returns.

Calculate your expected investment returns with the help of our investment calculators

Investment Calculator
SIP Calculator FD calculator SDP calculator Gratuity Calculator

Frequently asked questions

Should I invest in multiple FD schemes?

It is advisable to invest in multiple FD schemes to diversify your investment portfolio and minimize risk. However, it is important to ensure that you have sufficient funds to meet the minimum balance requirements of each scheme.

Should I compare FD interest rates before investing?

Yes, it is important to compare the interest rates before investing in an FD. This will help you identify the best interest rate for your investment and maximise your returns.

How much will I earn if I invest Rs. 50,000 in FD?

The amount you earn on an FD depends on the interest rate offered by the bank and the tenure of the deposit. Assuming an interest rate of 8.60% per annum (which is the maximum interest offered by Bajaj Finance) and a tenure of 1 year, you would earn approximately Rs. 4,400 on an investment of Rs. 50,000.

Should I invest in FD every month?

Yes, you can invest in an FD every month through Bajaj Finance Systematic Deposit Plan. This will help you save regularly and earn interest on your savings.

I have invested in FD. Once it matures what should I do with the maturity amount?

You can either withdraw the maturity amount or reinvest it in an FD or any another investment scheme like Mutual Funds, Stocks, etc. If you choose to reinvest, make sure you do proper research.

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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
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.