What is Fixed Deposit? Meaning & Types of Fixed deposits in India
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- Updated On:28-Jan-2021
- Replies:1
Short Answer
A fixed deposit is quite a common investment option provided by banks to help boost our savings. You deposit certain sum of money with the bank and earn interest on it. However, there are many types of fixed deposits or FD's. To learn more, we have useful details provided it here.
Detailed Answer
Fixed deposits are very popular fixed return-low risk investment schemes wherein an investor fixes an amount for a said period of time. No doubt, Fixed deposit or FD has been a highly preferred choice amongst people of India. And, this trend is being followed since decades. Do you agree to it?
Each one of us or our parents or grandparents might be having an FD for sure. Since this has been regarded as a safe investing option giving fixed returns over the years.
Now, depending on the bank policy, a fixed deposit can be opened as:
- Cumulative Fixed Deposit (Paid at maturity)
- Non-Cumulative Fixed Deposit (interest paid on regular intervals)
Interest rate for fixed deposits depends on RBI policy and bank notification. It usually ranges from 6-8% p.a. (pre-tax return). This may be slightly higher for senior citizens.
Tax Saving Fixed deposit: In case the investment under this scheme for a period of 5 years and more, then the individual can claim tax exemption benefit under Section 80C up to Rs.1.5 Lac of Income Tax Act.
Recurring deposits are again fixed return-low risk investment schemes wherein an investor agrees to deposit decided sum of money on a monthly basis. This is very popular scheme in India wherein Indian families save some amount on monthly basis.
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Discussion (0)
There are mainly 5 types of bank accounts in India. These include Savings account, Current account ,Fixed deposit account, Recurring deposit account and NRI accounts.
A fixed deposit is one such financial instrument which will help you deposit a sum with a bank for a predetermined period of time and the bank pays an interest on that sum. In essence, it’s a way of lending money to a bank, the opposite of taking a loan. These are sometimes even referred to as bonds or term deposits.
The best investment plans in India for a year are to invest in fixed deposits, short-term funds, and ultra-short-term funds. These are less risky and produce relatively higher returns than banks.
Fixed Deposit (FD) are saving tools offered by banks to deposit lump sum amount for a fixed period of time on a higher interest rate than saving accounts. Mutual funds are investment products which pool money from numerous small investors to create a fund.
You can choose any bank in India to open an account in, be it a private-sector bank or a public-sector bank. By the market share SBI, HDFC, and ICICI Bank are the three top banks that can be considered when looking at the largest banks in India.
Several monthly income plans available such as senior citizen fixed deposit, senior citizen savings scheme, post office monthly income scheme, tax-free bonds, debt funds, and many more are the best monthly income place for senior citizens in India.
Student credit card is quite a new concept in India. The concept is getting popular nowadays. Many credit cards are available such as SBI Student Plus Advantage Credit Card, HDFC Bank ForexPlus Card, ICICI Bank Student Travel Card, HDFC Multicurrency Platinum ForexPlus Chip Card and so on are available.
There are several investment plans such as FD, Post office Monthly Savings Scheme, Government Bonds, Mutual Fund Monthly Income Plans. These can provide you with a very good monthly income.
Government securities include both T-Bills (Treasury Bills) and Government bonds which are both short and long-term instruments issued by the Central & State governments for various purposes. Retail investors are allowed to invest in G-Secs provided by the RBI. One can buy them directly from the Stock exchanges in a non-competitive method.
There are multiple avenues through which a 15% p.a. return on investment can be made. These are through equity, mutual funds, fixed deposits, government bonds, and schemes, etc.