Opening a fixed deposit is both lucrative and simple. We outline the important steps.

The pursuit of money and power for all mankind, stems from a basic desire for safety. As human beings, we crave for the comfort of knowing that we are adequately protected today and tomorrow. An uncertain future can create chaos in your life. The fear that the future may bring with it financial upheaval and a loss of many of the things that you take for granted today – this is the thought that scares you in the present.

Each of us craves security, but how many of us are able to provide for it? We believe that working hard all our lives will help us amass wealth – but this seldom happens. While you may have a high income, it is often spent on household maintenance, daily living expenses, food, travel, children’s education, medical expenses, etc. Before the month is up, your income is on its last legs, and you have not been able to save much money. So this cycle continues for years, and you find yourself in a position where there is not much money left in the bank.

You might feel that depositing your savings in the bank will help you earn interest on it – and it does. But a better way to create wealth is by investing it in an instrument that offers low risk and high returns. You might be wary of investing on the markets, but you can certainly invest in a fixed deposit if you are risk-averse.

Why create a fixed deposit account?

A fixed deposit is one of the best investment options in the market today. All you need to do is deposit a certain sum of money with your bank, for a certain tenure (measured in months). At the end of the deposit tenure, your money is returned to you with the interest earned on it.

The best feature about fixed deposits, is that the interest payable on it does not change throughout its tenure. The interest rate is not dependent on the fluctuations in the market. For instance, if you create a fixed deposit online at an interest rate of 7%, then you will be paid interest at 7% for the entire tenure even if the bank drops or raises the interest rates for new deposits. The interest rate is not changed mid-way on your deposit for any reason. This makes the fixed deposit a guaranteed return option. In fact, you can use an FD calculator to find out how much the growth on the deposit will be.

It is possible to open a fixed deposit online. Leading banks in India today offer this facility, and it is a completely paperless process. Here’s how you open a fixed deposit online in 3 essential steps:

1 Log on with your savings account. If you already have a savings account with the bank, it becomes easier to open the fixed deposit online. Log on to bank’s site and go to Personal banking > Deposits > Fixed Deposits. Make sure you use the FD calculator provided alongside to find out the projected appreciation at maturity. Now you must fill out a small form where you must enter personal details like your name, city of residence, email ID and mobile number. After this, the bank calls you to take the process further. Even those who do not have a savings account with the bank may open a fixed deposit, provided a savings account is opened with the bank first. The bank will have to process your application separately if you do not have a PAN card or Aadhaar card. Do check the prevalent rates being offered by the bank before you sign up. The rates are normally 0.5% higher for senior citizen fixed deposits.

2 Set up the FD account. After verifying your details, the bank processes your application and approves it. The bank now sends you the account details via email. You will be sent these details: account number, customer ID, IFSC code, schedule of interest rates, and maturity amount. You can create a fixed deposit online using an amount between Rs 10,000 and Rs 10,00,000. Do find out if the bank imposes any limits or restrictions on the account usage. For instance, the bank may not allow cash withdrawal, creating more FDs from the same savings account, adding a nominee or beneficiary to the FD account without bank approval, or funds transfer from the FD account to another account.

3 Start using the account. Once your FD account is set up and all details are sent to you, you can get full access to it. Mostly, it is useful to access this account in case of recurring deposits, when you periodically deposit money in it. However, you may also do the same with the fixed deposit account, in case the interest rates rise. At this point, you may choose to increase the deposit amount to maximise the interest potential on it. However, you must apply for the enhanced deposit separately and await bank approval.

The fixed deposit money is useful for making many personal and professional milestones come true. Since you have the freedom to select the deposit tenure, you can time the maturity date to coincide with a future milestone. For example, if you wish to take your spouse for a foreign holiday on your 25th wedding anniversary eight years hence, you can select a tenure of eight years (96 months) so that the deposit money will come to you by the time this milestone rolls around. A fixed deposit is a good way to set aside money for the future – and make many dreams come true along the way!

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