5 Tips to Maximise your Fixed Deposits

 

Fixed Deposits or term deposits as they are commonly called are certainly the most widely used investment tools and one of the safest too.  Investors are constantly on the lookout for the best FD interest rates available for long and short-term investments. The profitability of fixed deposit investments does not solely depend on the availability of the best FD rates, however. A lot also depends on how you plan your schemes and where you invest. Let us take a quick look at some simple ways to maximise your FD returns.

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Making FDs more Profitable: Right Planning goes a Long Way

1. Focussing on Yields is Important: We are always checking on the best FD interest rates available before investing. It is also essential to focus on yields. Some schemes provide compounding of interests on yearly basis. Others compound quarterly. The latter will provide better yields. Keeping an eye on yields before picking a fixed deposit scheme is the right way forward.
2. FDs Floated by Housing Finance Companies are Better: There are a few housing finance companies that provide fixed deposit schemes offering comparatively higher rates of interest than the market. Start with those offering the best FD interest rates. Check for impressive safety ratings from CRISIL, CARE, and ICRA rating for safe investing guaranteeing peace of mind. Look for benefits like flexible tenure options, easy withdrawals, and convenient payment schedules. You can check on ICICI HFC FD interest rates Calculator, to start with. Most of the above-mentioned conveniences are likely to be on offer too.
3. Choose to Invest in Multiple Schemes: Instead of putting all your money in a single fixed deposit, choose to break it down into multiple schemes. You can keep multiple deposits with the same finance company for ease of operation. However, choose schemes with best FD rates and varied maturity tenures for sustained liquidity. You can also make a mix of cumulative and non-cumulative schemes for maximizing gains while maintaining a steady cash flow. While non-cumulative schemes provide periodic pay-outs, cumulative deposits are ideal for wealth creation.
4. Opt for a loan against your Deposit for Catering to Short Term Contingencies: If you have a pressing need for money, it is best to apply for a loan against your fixed deposit scheme instead of making a premature withdrawal. Untimely withdrawals attract penalties and also reduce the interest rate payable. Loans are better deals. There are finance companies that support the easy processing of loans against fixed deposits. As much as 75% of the total invested amount can be claimed as a loan. Interest is payable on only the amount that has been utilised and for the number of days, it has been utilised.
5. Submission of Form 15G/15H: If the interest earned on the fixed deposit scheme is above a certain specified limit, there will be tax deducted at the source. You need to submit form 15G or 15 H to avoid this deduction. 15H is meant for senior citizens.

You can also try ladder investment strategies for maximizing gains on FDs. Preferring longer tenures as opposed to shorter ones for your FDs also guarantees better returns.

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