According to studies, women have a number of innate qualities like patience, discipline, and alertness, which allow them to succeed as investors. This Women’s Day, as you chalk out your investment plan, keep the 2019 theme ‘Think equal, build smart, innovate for change’ in mind. You can address retirement savings, tackle regular expenses, and grow your wealth with ease by relying on FDs. Read on to know why FDs make for a compelling investment option.
Grow your finances in a stable and secure environment
Not being linked to the market, Fixed Deposits for Women assure guaranteed returns over the tenor via fixed interest rates. Today, some FDs offer generous interest rates of up to 8.75% even to new customers, which means that you can profit from both safety and high returns.
In fact, FDs did so well in 2018, that this instrument beat most other channels through the year. To illustrate, while equities managed returns at 2.8%, fixed deposits gave returns at 6.25%. While banks keep your finances in a state of low risk, look for a good credit rating like CRISIL’s FAAA or ICRA’s MAAA if depositing with an NBFC.
Tailor your tenors to help you meet short- and long-term life goals
FD issuers offer maturity terms ranging from a few days to years. This allows you to lock in your finances as per your life goals. So, if marriage in the family is on the cards 3 years from now, you can grow your finances securely by investing them for around that length of time.
One way of assuring yourself constant liquidity to meet short term goals is by laddering your FDs. This involves staggering the maturity dates so as to achieve regular payouts. So, if you need to cover a child’s tuition fees every summer, you can ladder your FDs with tenors of 1 year, 2 years, 3 years and so on.
Ride on the power of compounding and build a substantial retirement fund
Earning via compounding interest allows you to boost your finances quickly. For instance, investing an amount of Rs.1 lakh for 10 years at an 8% interest rate gives you an interest-earning of Rs.1,15,892.50 when your FD has compounded annually. In comparison, simple interest would give you just Rs.80,000, which Rs.35,892.50 less.
When invested for a long tenor, even small amounts can grow to a large corpus thanks to the effect of compound interest. Keeping this in mind, you can effectively create a large retirement fund by starting early. For example, if you are 30 years of age and invest a sum of Rs.50,000 for another 30 years at an 8% interest rate, you land up with Rs.5,03,132.84. However, should you be 40 years of age and invest the same for a 20-year tenor your maturity amount would be just Rs.2,33,047.86.
Benefit from higher FD interest rates if you are a senior citizen
With minimal risk, an FD becomes a viable option for senior citizens. To cater to the financial needs of this age bracket, almost every financier hikes FD interest rates for senior citizens. Generally, this interest rate boost is in the range of 0.10% to 0.15% but can go higher as well. Some issuers even offer senior citizens FD interest rates of 9.10%. Earning at this rate can help you battle inflation and also add valuable pennies to your kitty.
Gain assistance from interest payouts to foot recurring expenses
Fixed deposits offer you the option of obtaining regular interest payouts. Issuers normally give you the option of choosing to earn monthly, quarterly, bi-yearly, or yearly. While every increase in the frequency of payouts reduces the total amount you earn at maturity, it helps you gain liquidity without having to break your investment. It can be very effective if you have recurring expenses like EMIs, medical bills, or daily living costs to foot.
After having considered these 5 reasons, waste no more time in approaching a reputed financier. Look out for a high-interest rate coupled with a good credit rating and remember, the earlier you begin, the larger the effect of compounding will be!