When is the Right Time to Invest in a Fixed Deposit

Maximise your returns by investing in an FD. Read on to know more.
Right Time to Invest in FD
4 mins
18 January 2024

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 crucial 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 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.

Additional Read - A Comprehensive Guide about Post Office Saving Schemes?

Do your research

It is always wise to do your 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 more significant amounts for a longer period of time. Also, bear in mind that NBFCs offer better interest rates than banks. For example, the Bajaj Finance Fixed Deposit offers an interest rate of up to 8.85% p.a. in addition to other benefits such as high credibility and an easy online application process.

Pro tip

GOOD rates | BETTER returns | BEST safety | Get returns as high as 8.85% p.a. Only on our website and app.

Make the most of laddering

Interest rates are subject to frequent changes. Wondering if your investment will be stuck at a lower interest rate 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.

This method also allows you to enjoy flexibility if you need to liquidate your FD for an emergency. By liquidating only, the amount 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 of factors like FD interest rates and taxation policies so that you can invest wisely and get the most out of your fixed deposit.

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Disclaimer

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.