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Are fixed deposits a good investment?
Investing in Fixed Deposits (FD) is considered one of the best investment options for people who are looking for good stable returns without exposing themselves to volatile market risk. FDs are offer better return than any saving accounts but this benefits of keeping your money in FD goes beyond the good return rate.
Why is FD a bad investment?
#2: FDs are taxable, which further reduces the net amount you earn. Compared with equity mutual funds, long-term returns are taxed at 10\% for holding period more than 1 year, on gains more than Rs 1 lakh. FD interest is taxable at your current tax slab. The higher your income, the lower your FD return will be.
What is better than fixed deposit?
What are short term debt funds? Short term debt funds invest in bonds with a maturity period of one to three years. It is suitable for low-risk investors with a similar investment horizon. It is a tax-efficient investment as compared to fixed deposits for investors in the higher tax brackets.
Are fixed deposits a good investment option?
Although fixed deposits have low-interest rates compared to other investment tools, the security and guaranteed return make fixed deposits an ideal option for those who want a more conventional way of earning more money. Did you know that investing in a foreign currency fixed deposit offers a higher interest rate?
Is FD a good investment option?
FD is considered as a safe investment option since decades. You can earn a maximum of 7–8\% pre-tax return on Fixed Deposits based on type of FD and period of Fixed deposit. You get fixed returns from FDs. Fixed deposit has been the traditional and one of the favourite method of investing money in India.
What are the differences between tax savings accounts and fixed deposits?
Savings Accounts don’t have lock-in periods. Fixed Deposits that are made for tax savings come with lock-in periods of a min of 5 years. Savings Accounts can’t be used to secure loans. Fixed Deposits, except tax saving FDs, can be used to secure loans.
Can you use a fixed deposit to get a credit card?
You can even use a Fixed Deposit to get a Credit Card. Some banks will charge considerably lower interest rates for Credit Cards secured by FDs. If you, as a depositor, are looking for tax benefits then FDs are the ones to will give it to you via their tax-saving schemes.