This is The Best Time to Revisit Deposit Rates

August 14, 2017 Business & Finance

Investments can be risky, hence it is important to know which type of investment would benefit you in the long run. People are always lured to money making shortcuts but not all the shortcuts lead you to the right destination. In order to increase your income via investments, you need to have knowledge and experience of the twists and turns of the market.

Investments can be a better option if it is well planned, a well-planned and a well-implemented investment can gain better returns. As there are many sources of investments in the market, you need to choose the one which can be beneficial for you. To gain higher returns you can choose to invest in stocks and shares and for that, you need to have a proper knowledge to invest in equity funds, as the stocks and shares are prone to market risks.

This is The Best Time to Revisit Deposit Rates

If you are investing for the first time and have no knowledge about the market, secured investments like FDs or Debt funds can be a better option. Debt funds may not make you lose your money, but the returns you gain from debt funds depend upon the company’s market condition, whereas, FDs can be a better option which provides security of the investment as well as stable returns.

A fixed deposit is a service provided by the banks and NBFCs, wherein you deposit your money in the FD account and you can gain returns according to the interest rate. Which means the amount of money which will be generated from your investment will be in accordance with the Fixed Deposit interest rates. Hence, it is necessary to choose your investment source carefully before investing.

Banks have been like a symbol of trust for the people, hence they tend to think that bank FDs can be a better option for the investment. Due to the new reforms introduced by the Reserve Bank of India (RBI), the banks have lowered their interest rates on FD, the banks only provide 6 to 7 percent interest rates on Fixed Deposits p.a.

While the banks have been replaced by the NBFCs when it comes to better interest rates on FDs. The Reserve Bank of India (RBI) does not regulate the NBFCs, thus it cannot make any changes or adjustments in their lending policies. In comparison to the banks, the NBFCs provide 8 to 8.5 interest rate on FDs.

The importance of interest rates on FDs can be understood with the following example.

Bank FDs: If you have INR 1 lakh the maximum interest applied by the banks will be around 7 percent, which means your yearly income will be INR 7000 and by the end of 5 years you will have INR 35,000 as your interest earnings.

Corporate FD: If you have INR 1 lakh the maximum interest rate applied by the lender will be around 8.5 percent, this indicates that your yearly income will be around INR 8,500 and by the end of 5 years you will have INR 42,500 as your interest amount earnings.

The final interest amount on maturity can be different if the investor reinvests his/her yearly gained interest amount in their FD accounts. To make sure that you earn maximum returns you can take help of an FD interest calculator.

As interest rates are the most important factor for the investor to gain better returns, NBFCs might be the most recommended option. Apart from interest rates, the NBFCs have flexible policies and better liquidity options which make them more preferable. You can also apply for an online Fixed Deposit account, you just need to fill in the form and the representative of the NBFCs will collect the necessary documents and payment from your doorstep.