7 Advantages Of Having A Fixed Deposit Account

Introduction: 

A fixed deposit is an investment tool that you can use to deposit your sum of money for a fixed tenure of time at a fixed rate of interest. When you get a sum from any and want to save it for your future, then a fixed deposit is the best option. It is also essential that you don’t withdraw from your fixed deposit until your tenure ends. You will be charged with a penalty. So, it is best to follow the tenure structure of the investment and make great use of it for increasing your income savings. 

Opening a fixed deposit is now a more convenient and flexible option for those who want to save for the future. Both online and offline methods can open your fixed deposit. Both banks and NBFCs in India provide options for fixed deposit investment to save your hard-earned money for your future. 

Perks of having increased online facilities with financial services are:

• You can quickly make use of your accounts anytime and anywhere.
• You can also apply for deposits easily online.
• You are eligible for PIDM protection.
• You can easily find out the needed details about your deposits online. Also, suppose you are looking for a way to build your savings with a guaranteed return on your invested capital. In that case, a fixed deposit is an excellent conservative avenue. 

Benefits of fixed deposit:

1.  Investment Return is Guaranteed: 

One of the main worries when investing is the thought about when will you get your money back. Although unlike investing in the stock markets, a fixed deposit guarantees money back at the end of the tenure. All you need to do is wait for your returns to mature. But also, at the same time, if you withdraw before it’s mature, you will have a penalty. 

1.  Capital and Returns are assured: 

If you are worried about risking your money, you don’t have to. Although fixed deposits in Malaysia are regulated by Perbadanan Insurans Deposit Malaysia (PIDM), It is a government agency designed to protect and avoid the loss of money by depositors.

1. Inflation Loss is covered: 

The interest rate depends on the bank you are applying to. All banks offer competitive interest rates for fixed deposits compared to a regular savings account which could help compensate for the annual inflation rate.

1. Regular Earning Potential: 

You earn a rate of interest with the money you have deposited over a fixed time. It happens monthly, quarterly, or yearly. However, some banks allow you to deposit or transfer the interest you have earned to your desired bank. It means that you will not be able to withdraw your money until the tenure ends, you will be able to earn money through interest payments that are provided by selecting the maturity instruction of rollover principal and withdraw your money until the tenure ends, you can quickly get to earn money through the interest payments, which is provided by what you selected by the maturity instructions of rollover principal and withdraw interest return. 

1. The flexibility of Deposit Tenure:  

A fixed deposit has flexible terms. You can choose a short-term fixed deposit so that you can withdraw within a month or if you choose a long-term fixed deposit, you can wait for years until it matures. All banks can vary in tenure criteria, so it is necessary to be mindful when selecting the tenure suitable for you to avoid premature withdrawals. 

1. Quick cash withdrawal:

Unlike other investments like stocks and unit trusts that may require a few days to cash out, a fixed deposit could be cashed out anytime. A fixed deposit can be cashed upon when you are presenting yourself to the bank with valid documents. To get the best returns, you will have to wait for your invested money to mature. 

1. Encourages saving habits: 

In case you want your money to grow. You do not wish to risk penalty fees when you wish to break your agreement. Having a fixed deposit helps you develop a good habit of saving by avoiding the temptation of withdrawing your funds under the agreed period. 

Managing your fixed deposit: 

It is essential to consider the financial aspect of a fixed deposit before you get one. Although some people would enjoy the interest as they reap once maturity is attained. Still, in case if there is a possibility that you can withdraw your money early. If you want to save money early, you would also want to think about the investment term. You would also want to keep in mind your fixed deposit maturity date. However, when your fixed deposit matures, and the new interest rate is lower, here are alternatives you can consider:

• You can request a higher interest rate (Only if you are having a long-term relationship with your bank)
• You can also reinvest in a new bank or account that offers a higher interest rate.
• You can deposit in a special or a promotional savings account with higher interest rates (T&Cs may apply)
• You can invest in other financial instruments.

Conclusion: 

When you invest in a fixed deposit, you can select the term depending upon your needs and requirements. The interest is then credited to your account. You can then choose to depend upon your preference for monthly, annually, or even at maturity pay-outs. Fixed deposits have guaranteed returns when they are compared with other short-term market investments.