There is no doubt that a fixed deposit account is the safe-haven investment option for those who are risk-averse and wish to ensure their money is safe from any type of financial market volatility. Compared to other investments that provide more exposure to the equity market, a fixed deposit account offers a low-interest yield. However, risk-free investment is another reason people choose fixed deposits as opposed to another type of investment option. To obtain a higher return on your fixed deposit investments, you should know some strategies to earn higher income.
Here are some tips to help you maximize the return on your fixed deposit
Opt for an online fixed deposit account
Some banks and NBFC these days offer extra interest rates on fixed deposits if you open a fixed deposit account online. As online banking becomes more widely used, anyone can open a fixed deposit account without visiting a branch. Various banks offer to open a fixed deposit account with the best interest rates online, so you can compare them and choose the one that gives you the highest rate.
Submit forms 15G and 15H
You can submit forms 15G and 15H, even if you don’t have taxable income, to ensure that TDS will not deduct from your interest amount. Nevertheless, it is important to remember that this form only applies to those with a net annual income of no more than 2.5 lakh and who fall under the tax-exempt category. Form 15G and 15H are used to inform the tax department not to deduct TDS since your income is below the taxable bracket. So, make sure you do not submit the form if you fall under the taxable income group.
Make cumulative deposits
Compounding interest is one of the benefits you get when you invest in cumulative deposits. The interest on bank deposits is generally compounded every quarter, whereas interest on company deposits is not compounded every quarter. Therefore, compounding is one of the most powerful techniques that can help you earn higher yields in the future. There are, however, other factors that must be taken into consideration, such as safety, liquidity, etc.
Make sure you do not withdraw your FDs too early
It is advised never to withdraw your fixed deposit money from a fixed deposit account before maturity, as most banks charge a heavy penalty if you withdraw your money before maturity. Furthermore, a large lump sum deposit should be avoided since you may need the money in an emergency.
If you want to deposit a sum of ₹10 lakh, then instead of putting a lump sum in one single deposit, divide it into 10 deposits of ₹1 lakh so that you can withdraw just one deposit. By doing this, you can withdraw the money at any time without paying any penalties associated with it due to an early withdrawal. you can find a fixed deposit account with 1 Lakh FD to 2 crore FD that will help you reach your financial goals. To get the most out of your fixed deposit, it’s important to choose the right bank and the right term for your investment.
Place the fixed deposit in the name of the parents
Most banks offer senior citizens an additional 0.50 percent interest rate on fixed deposits. Consequently, you may open a fixed deposit account on your parents’ behalf if they do not have taxable income. However, you should avoid doing this if they fall into a higher income tax bracket.
Fixed deposits are a popular investment choice for people who want a higher return on their money but don’t want the risk of investing in the stock market. A fixed deposit account is a great way to earn more from your money. You can boost your earnings and reach your financial goals faster by earning interest on your deposited funds. To get the most out of your fixed deposit account, choose the account with the best interest rates and terms. With a little research.