Fixed deposits (FDs) are a popular investment option for individuals looking for a secure way to earn steady returns. The interest rate of an FD depends on several factors, such as the amount invested, tenure, payout frequency, type of customer and the interest rates offered by financial institutions.
Let us explore the monthly interest rate on Rs. 40 lakh FD. By understanding the factors that affect FD rates. Investors can make informed decisions and choose the best investment option that aligns with their financial goals.
Benefits of investing in FD
- Fixed returns: The interest rate offered on FDs is pre-determined and is fixed for the entire tenure of the deposit. This makes it easy to plan your finances and know exactly how much return you will earn on your investment.
- Senior citizen benefits: Senior citizens may enjoy special interest rates on FDs, which are higher than the regular rates offered to other investors. Financial institutions like Bajaj Finance offer up to 0.25% higher interest on their FD for senior citizens.
- Low risk: FDs are a low-risk investment option, which makes them a good choice for conservative investors. However, it is important to understand that the returns you earn can be lower than other investments like equity or mutual funds.
- Liquidity: FDs offers high liquidity, which means you can withdraw your deposit easily as per your requirements. A nominal penalty may be charged for premature withdrawal of FDs. Some financial institutions also offer loan against FDs which mean you don’t need to prematurely break your FD.
- Diversification: Investing in fixed deposits can offer diversification to your overall investment portfolio. This is because FDs are less risky and offer stable returns when compared to other investment options such as stocks, or mutual funds. Diversifying your portfolio is essential in managing risks, and FDs can be used as a mechanism to achieve that objective.