You get an assured sum of money at the end of the maturity period. Unlike other investment tools, FDs are not market-driven. Safe InvestmentįDs are risk free investments. Although the interest earned on such FDs is taxable, you can claim a deduction of a maximum of Rs. It falls under the Exempt-Tax-Exempt category. Tax-saver FD attracts tax benefits under section 80C of the Income Tax Act, 1961. The loss of interest becomes the penalty that you pay for a premature withdrawal. 1,00,000 invested for 3 years at 9% interest rate, if withdrawn after a year, will get interest at the rate applicable at that time, which will be lesser than 9%. Premature withdrawals attract penalties.įor example, a FD of Rs. A fixed deposit account holder will inadvertently save money, since FDs require the holder to invest a lumpsum amount for a fixed period of time. “Do not save what is left after spending, but spend what is left after saving.” – Warren Buffet. Here are the advantages of having a fixed deposit account: Encourages Savings Advantages of Having a Fixed Deposit Account Broke? Fix it with Fixed Deposits What is Fixed Deposit (FD)?įixed deposit is a financial investment instrument offered by banks & NBFCs wherein investors can deposit money and get a high rate of interest than a normal savings account.
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