Right from the birth of a child, parents plan for their future. Their schooling, higher studies, career, and marriage, everything needs money in the first place. It takes dedication and effort for an efficient investment plan to financially secure the uncertainties of life. There are various available investment options in the market based on the degree of risks associated with the plan.
Market-linked plans promise high returns but are volatile in nature. Investments like Fixed Deposit (FD), on the other hand, offer guaranteed returns for your investment with a predetermined addition of FD interest rates. If you choose dependable financial providers, you will get high-interest rates on.
Why invest in FD for your child?
FD is known to be one of the oldest and safest investment options in India. The FD interest rates are higher than the traditional bank savings account. Following are a few reasons for you to consider investing in a fixed deposit:
- It is a risk-free investment option with assured returns ensuring a financially secure future for your child.
- You can renew your FD for up to 10 years. Every time you renew, the base amount increases, attracting higher .
- The FD interest rates are higher than all other risk-free investment options like EPF, PPF, etc.
- FD provides flexibility in choosing the tenor, type of FD, and frequency of interest payout.
- In case of financial emergencies, you can avail loan against FD wherein you can use up to 90% of the accumulated funds.
- You can make partial withdrawals if necessary by breaking the FD. However, you will need to pay the penalty for the same and would not enjoy the complete benefits of investing in an FD.
- The market rate fluctuations do not influence an FD’s returns, and your investments will be paid to you at maturity along with the predetermined interest rates.
- With India’s Income Tax Act, you can save taxes on income from FD up to Rs 1.5 lakh under Section 80C.
What are the Types of FD?
You can open an FD from conventional banks as well as Non-Banking Financial Companies (NBFCs). There are two types of FD, they are:
In a cumulative FD, the interest is compounded on a quarterly or a yearly basis. The FD interest rates are paid at the time of maturity with this type of FD. Cumulative FDs aid in building a sizeable corpus and receive them in a lump sum.
In a non-cumulative FD, the interest is paid out monthly, quarterly, bi-annually, or annually as per your preference. Non-cumulative FDs aid in earning interest payouts for fulfilling the regular expenses. Pensioners who seek regular income can opt for non-cumulative FD to meet their daily requirements.
Both cumulative and non-cumulative FD offers high-interest rates than a regular savings account. However, you can earn high returns from a cumulative FD than a non-cumulative FD.
Features of an FD
When looking out for a reliable financial provider, you will come across Bajaj Finance. It is one of the leading financial companies with CRISIL’s FAAA and ICRA’s MAAA credit rating. The company offers the highest interest rates of India’s other financial providers (up to 9.10%). Below mentioned are some of the features and benefits of availing FD from Bajaj Finance:
- Deposit a sum as low as Rs 25,000.
- Get guaranteed returns with fixed interest rates.
- Choose the type of FD and the frequency of interest payout.
- Flexible tenor options are available from 12 months to 60 months.
- Facility to extend the maturity date until the child needs the money.
You can compute the maturity returns easily using the onlineand plan your finances accordingly.