Having a Fixed deposit on your account without knowing all the pros and cons of keeping a Fixed Deposit at banks might just be a wrong decision if you are not aware of few things that we are going to discuss here. Fixed deposit is better for short term investment if you don’t have any other investment plans or don’t have sufficient time to do anything else with that money.Many of the customers, in fact, don’t even feel important to read all the terms and condition that bank has just made you sign at.
But on another hand, it is good as well, as it keeps your money safe and secure. If you are not having any time for using that money in any real work, it is the best time to go with the Fixed deposit till you think of doing something. But Keeping Fixed deposit in the bank for 10-20 years is never a good idea, which has some hidden tax charges as well.
Why should You Know The Facts Behind Fixed Deposit Investment Policy?
Just like not getting enough ROI [return Of Investment], or missing out another good investment plan instead of the current ones is a very common thing. First of all, I prefer knowing all the investment plans that banks will have, rather than just sticking to one. Doing it can open up more opportunities for you, where you might be getting much higher ROI from the bank or any other place where you invest.
I am not completely against the Fixed Deposit, in fact, I also prefer keeping your money in the bank for Fixed deposit. But Not for long term, It has more benefits while maintaining it for a shorter period. The market prices and values keep on fluctuating, you never know when what happens, so doing it for shorter periods can help you understand the market value and also it gives you freedom to reinvest the same money other opportunities as well.
Benefits Of Having a Fixed deposit:
- Safety: Your Money is safe in the bank, and it has 0% risk of loosing your money. Despite the fact that it might have small issues while withdrawing the money in terms of time, and few important paper works to be completed before withdrawing the money.
- Facilities: Once you have a Fixed deposit in the bank you will become an important customer to the bank. Therefore, you will get good priority from the bank, and you will have good support from the bank regarding Loan or credit card, etc. Once you have a good relation with the bank of clearing of dues in time, you will become a more trusted customer.
- Tax: Once you go ahead with the loans you will get tax relaxation benefits, this is the very common thing which many rich people do to save the tax from Income Tax Department.
Disadvantages of Fixed deposit
- Return in the fixed deposit is low when we compared with market inflation. The amount that you have deposited today as fixed deposit will not give you a better return. The amount in return that you are going to get will not be sufficient to cover your expenses that you had thought.
- The ROI that you get from the bank is extremely low, comparing to other investment opportunities.
- Those who still believe in the fixed deposit are fools. Fixed depositor will not be able to enjoy diverseness on their investment amount. If you have deposited in other fields as real estate, the stock market, it gives you the assurance of better return.
- As we all know on a fixed deposit, you will get interested in 7 to 8 % per annum. But you have to pay some percentage of tax every year depends on your deposited amount.
Investing your money in debt and equity fund is better investment option, which can give you higher ROI. It doesn’t worth paying extra tax again on the other hand, after investing the money in the bank for so many years. However, feel free to share your feedback.