All investors would want to maximize returns from their fixed deposits. It’s a low-risk investment where returns are moderate compared to investments in stocks. Given this, it makes sense to research and investigate and choose a fixed deposit plan that offers maximum returns.
Banks and financial institutions allow investors to check options for online fixed deposits. There are many advantages of fixed deposit investments. For example, it can provide for a family’s future, add to the principal investment, and complete an investment portfolio.
Comparing fixed deposit interest rates in 2022 is the best way to begin your research. Here, we present a list of ways you can maximize returns on fixed deposits:
Choose your plan carefully
When making an FD, go for a longer tenure FD. When the tenure of an FD is longer, you get a higher interest rate. There are also corporate fixed deposits, which offer a higher interest rate than the bank fixed deposit. Ensure that the corporate FD has an AAA credit rating. It is common knowledge that banks offer higher interest to senior citizens. So, it makes sense to place FDs in the names of parents. Some banks offer higher interest rates to fixed deposits made online. Buying a fixed deposit online has several benefits. Make it a point to ask if an online FD fetches a higher interest rate.
Let FD run till its full course
Let the fixed deposit run its full-term till its scheduled closure. When you take your fixed deposits before it matures, you curtail the life of the fixed deposit. You are paid interest only for the period you stay invested. You will be charged a penalty if you withdraw before the maturity of the fixed deposit. Instead, you could take a loan against your fixed deposit.
Research before you invest
Banks offer attractive FD interest rates. To maximize returns from FD, you should identify the fixed deposit which fetches the highest return on FD. Instead of going for high returns alone, you should compare fixed deposit interest rates 2022 offered by all major players. You should carry out extensive research before buying a fixed deposit. For example, finding out the bank’s financial history, credit rating, deposit base, etc., can be useful to make your decision. You can cut down on the risk by investing in FDs of two or more banks.
Choose your investment strategy
To maximize returns on FD, go for the cumulative fixed deposit. At maturity, the FD will fetch total interest earned along with the principal invested. You make interest on the interest, which is called compound interest. Another way to maximize returns is the ladder investment strategy, which is a means to ensure liquidity. What you do is open multiple fixed deposits with different maturity periods. So, there is always one FD available for your liquidity needs. Even if you don’t liquidate, you can reinvest.
Think of saving on taxes
Maximize returns on the FD by submitting Form 15G/15H and avoiding tax deduction at the source. Interest earned on an FD attracts tax if it crosses a certain threshold. Submitting Form 15G or Form 15H is a way out. Form 15H is for senior citizens.
In conclusion
Maximizing returns from your fixed deposits is a legitimate goal as an investor. To this end, you should do extensive research and choose an FD scheme that brings maximum ROI. A fixed deposit is a safe investment because it earns higher interest than any savings account. Always try to look for ways to maximize returns on your Fixed Deposits. We have discussed some of the ways in this article, you can ask for more from your bank representatives.
