Fixed Deposits are the most traditional form of investment, featuring fixed interest rates that remain unaffected even during market volatility. This allows them to provide assured returns upon maturity.
Additionally, Fixed Deposits also feature the power of compounding, which maximises returns on your Canara Bank FD interest rate over an extended investment tenor.
Although FDs are considered a safer alternative to other market-linked investments, there are a few things individuals should consider before investing in this tool. Find about them below:
- Credibility of the bank or financial institution
It is critical to check the credibility of the FD provider before investing in fixed deposits. Despite the fact that bank fixed deposits are a safe investment option, only up to Rs. 1 Lakh is insured under the scheme. As a result, before investing a large sum of money, it is prudent to check the bank’s credit rating. Instead of putting all your money in a single fixed deposit, you could invest small amounts in several banks to reduce your reliance on a single institution.
- Choose between bank and corporate FDs
Fixed deposits are classified into two types, namely bank and corporate fixed deposits. When selecting a high-interest fixed deposit, you must compare and weigh the various features and FD interest rates provided by banks and NBFCs.
It is common knowledge that NBFCs provide higher interest rates than banks. This will help you generate substantial wealth over the long term. However, you may consider looking at the Canara Bank FD interest rate and compare with other FD plans for informed decision making.
In this regard, you can resort to Bajaj MARKETS, which is a diversified marketplace of various FD plans offered by leading banks and financial institutions. You can compare the interest rates of different plans and choose the one that best suits your financial requirements. Overall, it makes it easier for you to choose the best FD plan.
- Invest in tax savings FDs
You can avoid paying taxes on your fixed deposit earnings by investing in a tax-saving FD. A Tax Saver Fixed Deposit with a 5-year lock-in period prevents you from breaking your fixed deposit before that tenor. If you redeem your tax-saving FD before it matures, the amount invested will not be tax-deductible. In fact, any deduction you claim will be deducted from your income.
Under this facility, you are eligible to obtain tax exemption of up to Rs.1.5 Lakh. It falls under the prerequisites of Section 80C of Income Tax Act. However, note that the deductions under this section is also applicable to other investment options. Thus, if you have already exhausted the Rs.1.5 Lakh limit, you will not be able to TDS exemption on your FD.
Another way to save tax on regular FDs is by submitting Form 15H or 15G. These forms can be submitted by individuals if they do not fall within the tax bracket, i.e., if their annual income is less than Rs.2.5 Lakhs. Consider these forms before the starting of a financial year to receive TDS refund.
- Consider knowing about the premature withdrawal clause
If you want to withdraw funds from a fixed deposit before it matures, you may have to pay a penalty. Thus, consider withdrawing your fixed deposit only in times of actual financial emergencies. Furthermore, when you withdraw your investment, you shorten the tenor. By doing so, you will also miss out on the benefits of reinvesting or compounding. All in all, your returns will get affected by this.
- Investment amount
The deposit amount determines the maturity proceeds. In this regard, you are free to invest any amount of money that is convenient for you. However, you should be aware that the higher the FD investment amount, the higher the maturity returns. At the same time, consider your Canara Bank FD interest rate, as it one of the crucial determining factors of your FD returns.
- Open FD in your parent’s name
If your parents have no taxable income, you can earn higher returns by opening a fixed deposit in their name. This is because you can save tax on interest income earned from an FD in the case of senior citizens.
Furthermore, senior citizens also have higher FD interest rates, helping you maximise your returns over the long term.
Evidently, a fixed deposit is the safest way to generate wealth and add to your well-being and financial security. Moreover, you should also consider investing in FDs to diversify your portfolio. The process to apply for an FD is extremely easy, as most banks and financial institutions allow online applications. However, before investing, consider your financial goals, risk-taking capacity and Canara Bank FD interest rate. You should also read the terms and conditions laid out by the bank before making an agreement.
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