In the world of investments, opting for debt and equity investments seems logical. Yet in today’s world, there are several options ahead of you that you will need to consider before investing. Opting for equities and debt instruments can be wise when the market performs well, this is ideal amongst the most sustainable investment options.
No doubt the recent budget has left several analysts and investors in a tough spot as the tax implications imposed on stock market instruments have led people into opening any type of fixed deposit including the most popular ones like tax saving fixed deposits. We shall discuss the overall impact of having fixed deposits.
Outdoing the budget with a fixed deposit account
The numerous fears of having invested your money in an avenue that makes you lose money can be curtailed. Investing in fixed deposit schemes will be a sure bet to steady and secure returns. As the name itself suggests, a simple investment of a small allocated fund can bring significant returns in the period of 5 years or even 10 years, it all depends upon your comfort to allocate funds towards a fixed period of time.
To get an estimate on the amount of savings you can incur, try and calculate the fixed deposit interest rate before you begin. Here’s a look at the overall benefits of having a fixed deposit:
Saving Habit – Having a tax saving fixed deposit account encourages a saving habit as you are not allowed to make any withdrawals before maturity, the minimum lock-in period being 5 years. This amount can act as a fall back that can be used to meet your future cash requirements.
Higher Interest Rates – A fixed deposit account typically helps you earn a better interest rate as compared to a regular savings account.
Lock-in and secure benefits: Enjoy the convenience of locking in your investments without the fear of investments linked with market fluctuations. For instance a tax-saving FD does not allow you to withdraw the money before the lock-in period is over, however there is an underlying tax advantage on your savings under Section 80C of Income Tax Act, 1961
Volatility-proof: Fluctuations in the market are a constant ire of investors. While gaining significant returns at one period of time, one can easily lose the amount gained in the next turn of events. That’s the reason why several prefer to invest in a fixed deposit.
Long term benefits: Get ahead with long term benefits, you can allocate a major chunk of your funds in an investment that is risk-free, devoid of the impact from market fluctuations and ensures that you receive a fixed return at the end of the period.
Taking a decision to allocate your funds in a fixed deposit bank account is one of the best ways to safeguard against the insecurities associated with the investing in the stock market.
