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Fixed deposits are among the most popular investment options in India and it should form a part of your investment portfolio as well. Fixed deposit (FD) in India provides a risk-free return at a decent interest rate compared to similar investment tools in other countries. Here are the key reasons you should consider making it a part of your investment strategy:

  • High safety assurance: PNB Housing’s fixed deposits carry an FAAA/Negative rating by CRISIL indicating low credit risk
  • No tax deduction: No tax is deducted at source on interest earned on fixed deposits up to Rs. 10,000 in a given financial year.
  • Loan facility: In case of an emergency, you can take a loan against your fixed deposits at a reasonable interest rate.
  • Premature cancellation: Most fixed deposit schemes allow you to withdraw your money at any point after a brief lock-in period at a nominal penalty on the interest earned.
  • Nomination: In accordance with the guidelines provided by the National Housing Bank, a nomination facility is available on all PNB Housing fixed deposits. In the case of a depositor’s unfortunate demise, both the repayment of the principal and the payment of any interest is made to the nominee.
  • Higher interest rate for senior citizens: PNB Housing provides the best FD rates in India. It also offers a 0.25% higher rate on senior citizen fixed deposits.

 

Non-Resident Indians (NRIs) Fixed Deposit

As per the latest RBI regulations, NRIs and Persons of Indian Origin can open a fixed deposit in India only on a non-repatriation basis. That is, the interest earned on the fixed deposit in India and the principal deposit amount cannot be transferred back to the country of residence or converted to foreign currency. The maximum tenure available on such deposits is for three years. Both the repayment of the principal amount and the payment of any interest earned is done only through a credit to the depositor’s NRO account. Tax will be deducted on the interest earned, as applicable.

If you are looking to invest in fixed deposits in India:

  1. Visit the PNB Housing website
  2. Click on the “contact us for deposits” button
  3. Provide your contact details and the amount you would like to deposit
  4. PNB Housing would get in touch with you to take the process forward.

Alternatively, you can submit the duly filled application form along with the proof of address and age, and the deposit amount at any of the PNB Housing branches or at select PNB Housing collection centers listed here. If you are an NRI or PIO, you will also have to provide the details of your NRO account.

Depending upon your financial goals, You can choose between Cumulative and Non-Cumulative Deposits. In the case of former, the interest earned is credited back to your fixed deposit account on an annual basis and paid out on maturity. This allows you to build a corpus as the interest compounds over the years. On the other hand, a non-cumulative fixed deposit pays out the interest earned at an agreed-upon frequency allowing you to generate a regular income from your investments.

A fixed deposit is one of the most popular investment options. Both young and old investors prefer investing their funds for a short and long term period in an FD. A fixed deposit provides guaranteed and fixed returns for the duration of the deposit and in return, the funds are available only when the deposit matures.

With digital banking getting more popular, people are preferring to open a fixed deposit online as compared to opening them offline by visiting a bank branch. Most banks now have mobile banking in place which allows the user to make transactions from their mobile phones. These mobile banking apps provide almost all the services that internet banking provides which means it is even possible to open fixed deposits online through the mobile banking application.

Opening an FD online has a lot of advantages which trump opening the deposit offline in a branch.

Here are the benefits of investing in fixed deposit online:

Convenience:

Opening an FD offline means you need to visit the bank branch, fill up the fixed deposit form, submit your KYC documents in case you are opening it in a bank where you don’t have an account. However, using internet or mobile banking, you can open a fixed deposit any time of the day, even outside of banking hours since these systems work 24×7.

Automatic renewal:

You can choose to renew your fixed deposit online at the time of booking the fixed deposit itself. The bank will automatically renew the fixed deposit on maturity. In an offline fixed deposit, you need to fill up the renewal form and submit it to the bank. These formalities are not required when you open an FD online.

Submission of tax forms:

If your income does not breach the no tax limit, you can submit form 15G or form 15H to the bank and they will not deduct tax on the interest income on fixed deposit. If your total income from a fixed deposit does not exceed Rs. 40,000, the bank is not supposed to deduct tax as per the recent budget rules. However, using internet banking, you can submit form 15G/15H online at the time of booking the fixed deposit which avoids physical paperwork.

Easy liquidation:

Liquidating a fixed deposit prematurely is extremely simple online. You can do it through internet banking in a matter of a few clicks. If you liquidate a fixed deposit before its due date, a penalty of 1% is charged and it is reduced from the interest already accrued to the account.

Sweep in facility:

When you book a fixed deposit online, you can also opt for a sweep in facility. This means if your bank balance exceeds a particular sum, the excess will be credited to a fixed deposit account. This balance will earn interest on it for the period it is swept in. Once you need to make a big payment, the funds will be swept out of the fixed deposit. This helps to earn additional income on your savings account balance.

Author bio:

 Neha Sharma is a finance student who loves to write in her free time. She has spent a considerable amount of time researching about fixed deposit. Through her work, she has explained how online fixed deposits are useful

We all want to increase our income from additional sources, apart from our regular job or business. Investments help us in doing that. There are various investment options, foremost among them being Fixed Deposits (FD) and Mutual Fund (MF).

For long, various types of Fixed Deposits like Regular FD, tax saver FD, etc. have been popular investment options for a majority of us Indians. Over the last decade or so, however, the mutual fund industry has seen increased investment as well.

The returns on term deposits interest rates are lower than MFs. But, they prove sufficient for people looking for security. You wouldn’t want your earnings to fluctuate according to market whims – which is what happens with an MF investment. We can manage with lower returns, but not without the safety of our money – a benefit FDs provide, among many.

Reasons for preference of FD over MF

A majority of us choose to invest in FD instead of MF. In this article, we will look into the reasons for the same.

  Assured returns – No matter what is the quantum of your fixed deposit investment, you will earn interest at the prevailing rate at the time of investment. Fixed deposits are immune to market fluctuations, thus making it one of the safest bets for you.

  Flexible investment period – You can determine the tenure of your FD investment as per your requirement and comfort level. In India, you can choose any tenure between 7 days and 10 years, subject to specific terms. If you want, you can maintain several fixed deposits in the same bank, each for a different tenure.

  Option of loan against your FD – In times of need, you can pledge your FD as security with your bank & obtain a loan against it, up to 90% of your FD value. You will continue to earn interest on your fixed deposit even after taking the loan. Thus, repayment becomes even easier!

  Receive interest on the time chosen by you – You will receive the FD interest monthly, quarterly, or yearly – as per your instructions. You can also change the mode after having selected one if the situation demands so.

  Advantageous for senior citizens – Senior citizens in India are eligible to earn a higher interest on their FD investment, making it very popular among them.

  Helps during exigencies – In times of emergency, when there is a sudden need for liquid money, you can dissolve your FD. The move allows you to withdraw the funds, against a charge levied by the bank for premature withdrawal. However, as advised by us above, it’s always better to take a loan against your FD, instead of liquidating it.

To conclude, your primary aim is not merely to earn more – but to earn more at a steady rate while keeping your investment safe — fluctuations in earning put your plans in disarray, also putting your money at risk. But an FD does just the opposite. So, different types of fixed deposits remain the leading choice of investment over mutual funds for a vast section of the populace in India.

It is wise to analyze different investment instruments before using them to build your investment portfolio. One question which might confuse investors is whether to invest in low-risk investment instruments such as fixed deposits or high-risk investment instruments like mutual funds? Both of these options have different benefits, and therefore you can use them both to diversify your investment portfolio after analyzing your risk-taking ability and financial requirements. To understand them better let us know the differences between them:

Investment method 

In mutual funds, several investors pool their money by investing in equity, bond or any other money market options. On the other hand, fixed deposits do not involve the pooling of money as an investor invests a particular amount of money for a fixed period of time individually.

Moreover, fixed deposits offer a fixed interest rate whereas the interest earned in a mutual fund fluctuates according to the market variables. 

Tenor 

The lock-in period of mutual funds depends on the type of mutual fund you have chosen. Also, you can withdraw your investment whenever you feel like but only after completing a specific period of time which is mentioned in the application form. 

When it comes to FDs, the tenor can be anywhere between one to ten years. Moreover, you can reinvest in a particular FD by investing both amount and interest or by only investing the principal amount. With such flexibility in investment terms, FD proves to be a better investment to help you ensure constant liquidity 

Safety 

Fixed deposit schemes offered by banks and NBFCs are both safe as the interest rates offered on a particular scheme cannot be modified or changed once you apply for it. 

Mutual funds might offer you higher interest rates but there is no guarantee that the interest rates will remain constant. Changing market conditions influence the interest rates and therefore you might gain or lose capital over a specific period of time. 

How to choose between mutual funds and fixed deposits?

Analyze the risks 

Mutual funds are for those individuals who are capable of taking risks and this is possible only when the investor is a beginner and still has enough time to consolidate his savings. On the other hand, anyone can invest in a fixed deposit if he/she wants to earn surplus returns in a safe way. 

Bajaj Finance Fixed Deposit schemes are accredited for their stability and safety by ICRA and CRISIL Ratings which are reliable third-party organizations. Therefore, you can be assured of your savings when you are investing in these FDS.

Diversify your portfolio 

A diverse and balanced investment profile is a must if you are willing to earn high returns for a long time. Therefore, if you have invested in many low-risk investments then you can think of investing in a mutual fund to maximize your returns. A fixed deposit can be used to balance any investment portfolio as it guarantees maximum returns with minimum risks.

Ladder your investments

You can ladder your investments by investing in a bunch of fixed deposit plans that have different maturity dates so that you earn the benefit of surplus cash flow on a regular basis that can be further invested or spent on expenses.

NBFCs like Bajaj Finance allow you to select the FD tenor between 12 to 60 months and you can also prefer periodic or cumulative interest payouts as per your requirements. Moreover, you can calculate your interest earnings with the help of their FD calculator which helps you to predict your earnings in advance. 

These were some key differences between mutual funds and fixed deposits. Also, while evaluating the basic differences between FD vs. mutual funds, you must also analyze your risk-taking ability and capital requirements.

Bajaj Finance and some other NBFCs allow you to earn interest rates up to 8.95 %. Moreover, Bajaj Finance also lets you use your FD as collateral for availing loans, which can be repaid in easy installments. As a result, your investments plans are not disturbed, and you can keep gaining your periodic interests as well. Therefore, you can think of these plans to build a rewarding investment portfolio.