Fixed Deposits (FDs) offer a secure and reliable way to grow your money. All you have to do is invest a lump sum online and enjoy a stable rate throughout its tenure, unaffected by market fluctuations. This predictability, zero risk, and convenience explain why millions of Indians include FDs in their financial toolkit.
While FDs are a straightforward investment, with a few smart strategies, you can maximise your returns and make your hard-earned money work even harder for you. Find out those practical tips and tricks below.
Choose the right bank with the highest rate
You can consider the IndusInd Bank Fixed Deposit, which offers best-in-class FD rates and gives your savings the financial boost it deserves. Besides competitive rates, the additional benefits you get are:
| Instant booking | Book your FD instantly through a fully digital and paperless process. |
| Flexible interest payout | Choose your interest payment frequency, i.e., monthly, quarterly, half-yearly, or annually.
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| Loan facility | Get a loan against your FD at a lower rate and manage all monetary requirements without breaking your deposit. |
| Auto-renewal | Opt for auto-renewal to continue earning interest without interruption. |
| Tax-saver FD | Invest in a five-year FD to enjoy a tax deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. |
Book your IndusInd Bank Fixed Deposit today! Get the best FD returns and maximum convenience with minimal effort!
Choose cumulative FDs
Cumulative deposits maximise your returns through the power of compounding. Unlike non-cumulative FDs, where interest is paid out periodically (monthly, quarterly, half-yearly, or annually), cumulative FDs reinvest the interest earned into the principal amount. This means that each interest payout earns interest in subsequent periods and leads to exponential growth over time.
Go for longer tenures
Usually, the longer you lock your money in a fixed deposit, the higher the interest rate you get. Moreover, a longer tenure allows your FD to benefit more from compounding and maximises your total returns.
For example, if a bank offers 5% for a one-year FD and 7.25% for a five-year FD, the difference in returns can be substantial over time. Investing ₹1 lakh in a five-year FD at 7.25% will yield around ₹1.43 lakh due to the compounded interest. The same amount in a one-year FD at 5% will yield only ₹1.05 lakh.
Therefore, if your financial situation allows, consider booking a fixed deposit with a longer duration.
Book fixed deposits for senior citizens in your family
Most banks in India offer preferential interest rates on fixed deposits for senior citizens, usually 0.25% to 0.50% higher than what individuals below the age of 60 get.
Senior citizens also qualify for tax benefits under Section 80TTB of the Income Tax Act, 1961. A deduction of up to ₹50,000 on interest income is allowed under this section. So, if you have parents or grandparents who are senior citizens, booking FDs in their name can help them get better returns, save on taxes, and manage their retirement funds more effectively.
Use FD laddering strategy
The laddering strategy involves splitting your investment into multiple FDs with different maturities. For example, let’s say you have ₹5 lakh to invest. Rather than putting this sum in a single large deposit, you can split the amount into five FDs with ₹1 lakh each in one-year, two-year, three-year, four-year, and five-year tenures.
As each FD matures annually, you can reinvest the money in another long-term FD at higher interest rates or use the funds as needed without a penalty. Moreover, interest earned on FDs up to ₹ 40,000 (₹50,000 for senior citizens) per financial year is tax-free. By staggering your FDs and timing their bookings, you can ensure a portion of your interest income falls within this tax-free limit each year.
Key takeaways
Maximising your fixed deposit returns is all about making calculated decisions based on your financial goals, market conditions, and personal needs. Choose the right bank, opt for cumulative deposits, invest for longer durations, utilise the benefits available for senior citizens, and employ a laddering strategy. These tips can help you maximise FD returns and meet your financial goals faster.
So, don’t delay your savings growth anymore. Book your FD today and follow these tips to watch your hard-earned money grow!
