In India, where there are a lot of investment options available, fixed deposits are considered as the safest instrument option by the masses. Since it is a low-risk investment, people do not find investing a good part of their monthly income in this.

The main reason for investing in any investment option is that you expect good returns. When you invest in fixed deposits, you will earn a rate of interest on your investments that will be automatically deposited in your account on regular intervals.

Here are some of the features of fixed deposits that attract people to invest in fixed deposits:

  1. Certain Returns:

One of the main reasons why people choose to invest in fixed deposits is because they are associated with the Reserve Bank of India. The RBI guarantees that all your investment is safe and the amount that you invest is even insured up to INR 1 lakh. So if in case the financial institution or lender that holds your fixed deposit goes into a financial loss, the money that you invest will be completely safe and you will be able to get it back.

  1. Easy to Withdraw:

If you find yourself in a financial emergency, you can withdraw the amount that you have invested in fixed deposits. However, it is advised that you do not do so. Breaking your fixed deposit will affect your financial stability and your investments.

 If you are out of options and if you really need some funds, you can avail a loan against the fixed deposit. This way you will continue getting returns on your fixed deposit as well as you can solve your financial issue. You can withdraw up to 90% of your fixed deposit amount and you will have to pay interest on the amount that you borrow.

  1. The tenure is Bendable:

The minimum tenure of fixed deposits is 7 days and the maximum tenure is 20 years. The tenure of the fixed deposit is completely dependent on you and your financial goals. It is up to you to decide if you to decide if you want to invest for a short-term or long-term. You also have the option to extend the term of your fixed deposit once it matures, but you will have to do so within a year of maturity of the fixed deposit.

  1. Provides Better Returns:

 Fixed deposits provide a very high interest rate. The rate of interest keeps changing from bank to bank. The rate of interest is also dependent on the amount that you invest and the tenure of your fixed deposit. The current rate of interest that is being offered by banks is somewhere between 7-8.5%. When deciding on which financial institution or lender should you open your fixed deposit it is necessary that you keep in mind to choose the highest possible interest rate.

If you have a lump sum amount that you want to invest, you should split this amount into smaller amounts and invest them in different fixed deposits and different financial institutions or lenders. This will help you a lot by providing you financial security. If ever you are in need of some urgent funds, you can break only one of the fixed deposits and continue getting benefits on the rest. You should also remember that you will have to pay tax if the interest return that you receive in one financial year exceeds INR 10, 000. If you want to know about that you need to pay tax or not then online FD interest calculator will help to check out your returns. The amount of tax that you will have to pay is completely dependent on which tax bracket which you fit into.