What is a fixed deposit?
Fixed deposits have secured their sweet spot among the many investment options available today. They provide an excellent opportunity to gain interest over a period of time and keep your funds secured. However, many individuals lack sufficient knowledge about fixed deposits, leading to confusion when making investment decisions.
It's crucial to stay informed and focused to make sound financial decisions. Conduct thorough research, consider all relevant factors, and then make the best choice. Understanding whether a fixed deposit is a good investment decision is key to ensuring financial success.
Numerous mistakes are commonly made when investing in fixed deposits, and to assist you in grasping their significance, we have created this comprehensive blog. In this blog, we will discuss the top five mistakes to steer clear of when considering a fixed deposit.
A fixed deposit or FD is an investment option provided by a bank where you invest your money at a decided interest rate for a fixed time frame. However, most people tend to ponder - are fixed deposits safe in India?
To put it simply - yes! It is among the top methods for investing your money and getting higher returns. At the end of the tenure, you receive both your initial investment and the accrued interest.
In India, fixed deposit is among the safest types of investment plan. The returns on your investment are guaranteed, and there is no risk of losing your money. You get better interest on your invested amount than your savings account. This makes fixed deposits an ideal investment option with a good interest rate.
Must Read: The Ins and Outs of Fixed Deposit Accounts
Benefits of fixed deposit
Many people often think about the safety of fixed deposits in India, and this uncertainty can discourage them from choosing this investment option. To address concerns about the safety of fixed deposits, let's explore their benefits.
1. Guaranteed return
Investing in a fixed deposit offers you a guaranteed return on your investment. Fixed deposit is not affected by market changes; thus, your invested amount is safeguarded from any possible fluctuations. Since the returns you will receive once the fixed deposit matures are guaranteed, it is simple to plan your financial objectives.
2. Safe for investment purposes
A fixed deposit is the safest option for investment purposes. There is no loss or risk associated with fixed deposits. Investing in a fixed deposit guarantees you promised interest on your matured investment.
3. Loan against fixed deposit
This is among the top benefits of a fixed deposit. You can avail a loan against your fixed deposit without affecting your fixed deposit plan. Different banks offer different loan procedures, so you can instantly get an approved loan if you have a fixed deposit in that particular bank.
At Kotak811, you can get a lifetime-free Dream Different credit card against your fixed deposit (minimum Rs 5,000). You can get a credit limit of up to 90% of your fixed deposit.
5 mistakes to avoid while investing in fixed deposit
As more people hop on this sought-after investment opportunity, there is also a need to protect your interest and not fall prey to the common pitfalls. Here are the 5 most common mistakes you must avoid while investing in a fixed deposit.
1. Investing without a defined target
When considering investing in a fixed deposit, having clear goals is a good idea. Even though fixed deposits are safe, having goals can help you make the most of your investment. Your target will help you outline the amount that must be invested to earn future returns. It is also recommended to keep some money aside for unexpected needs.
2. Lacking dedicated research
Doing thorough research is a must when it comes to fixed deposit investing. By comparing different offers in the market, you can make a better choice and find higher interest rates. This way, you can also identify which bank is safe[9] for a fixed deposit before investing your money.
3. Not having a solid investment plan
Most people make the mistake of not making an investment plan for their fixed deposit. You should consider different fixed deposit plans with higher interest to gain more profits. It is also ideal to invest in multiple fixed deposits in your bank with varying tenures and interest rates. Along with this, you must constantly evaluate your long-term and short-term financial goals to trace back your plan of action.
Must Read: How To Partially Withdraw Funds From Fixed Deposit
4. Not tracking your financial progress
Most people never track their financial progress and growth after an investment. You must always track your investment progress every day to evaluate more ways to grow your money.
5. Putting all your money in one fixed deposit
A common mistake most investors make is pooling all their funds in a single fixed deposit. This tends to make them more vulnerable and reduces the chances of portfolio diversification. You should never invest your funds in just one investment plan. Try to invest in different plans to gain more value.
Similar to choosing the right fixed deposit, consider opening your savings account with a trusted bank that only helps you save but also offers some great benefits.
Wrapping up
A fixed deposit stands as one of the premier investment opportunities, delivering a secure and steady return on your investment. It holds a position as one of the safest investment avenues in India. With guaranteed returns, safety in your investments, and the availability of loans against your fixed deposit, it presents numerous advantages for investors.
So whether you are looking to invest in a fixed deposit or opening a savings account that gives FD-like interest or an exclusive bank account with exclusive privileges, Kotak811 is your solution. Turn to Kotak811 and kickstart your investment journey with the best-in-class support and services at your disposal!
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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