A fixed deposit is a financial instrument offered by financial institutions, like banks and NBFCs. In FD, you invest a lump sum amount for a fixed period.
Today, in India, there are many investment options for retail investors to choose from. Each of these options has different features, risk factors, and reward potential. With so many choices, it can be overwhelming to choose the right instrument. However, one type of instrument that is widely preferred by all is a fixed deposit.
It is one of the most popular and traditional forms of investment schemes offered by banks, post offices and NBFCs (non-banking financial companies). But if you are a first-time investor and wondering what is FD and what is the hype around it? In this blog, we will discuss what FD is, the benefits of investing in FD and the interest rates offered by NBFCs like Mahindra Finance.
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What is fixed deposit?
A fixed deposit is a financial instrument offered by financial institutions, like banks and NBFCs. In FD, you invest a lump sum amount for a fixed period. You can choose the investment term, ranging from 12 to 60 months. You also have the flexibility to choose the investment amount. Today, leading NBFCs like Mahindra Finance allow investors to open an FD account with a small amount starting from Rs. 5000. But, you can invest up to Rs. 5 crores.
At the end of term, you get guaranteed returns, i.e., after your deposit matures, you get back the principal amount and the accrued interest. However, you must know that FD account come with a lock-in period, meaning you cannot withdraw or liquidate the funds in your account before the end of investment term you choose.
Benefits of investing in FD
- Assured Returns
Although there are many investment options in India, FDs have stood the test of time. In fact, even today, many expert investors and financial advisors recommend investing about 30 to 40% of the funds in FD for the simple reason that it gives you assured returns at fixed interest rates. And with competitive NBFC FD rates, you get returns in the range of 7.25% to 8.05% per annum.
- Easy to Invest
You can invest in FD without any hassles. Unlike other investment options, you need not worry about being constantly updated about the market conditions and time of your investment. You can invest in FD anytime you want.
With all financial institutions offering online services, opening an FD account has become easy. You must fill in and submit an online form and make the payment, and you are done!
- Nomination facility
Another significant benefit of FD investment is that you can appoint a nominee while opening the FD account. If something happens to you during the investment period, the nominee will be entitled to receive the funds. This is a great way to leave a legacy for your children. Also, you can appoint more than one nominee and also decide on the percentage of the funds each one gets.
- Ideal investment option for all
Whether you are just starting your investment journey or nearing retirement, FD is an excellent investment option for all. It lets you grow your savings over the years and accumulate a sizeable corpus for the future. Also, with high NBFC fixed deposit rate, you can grow your savings faster.
Fixed Deposit interest rates
You can open an FD account with any financial institution of your choice. But you must know that NBFC fixed deposit rates are generally higher than the interest rates offered by banks. A high-interest rate allows you to get higher returns, and you can grow your savings faster. Also, most NBFCs offer a higher interest rate for senior citizens than for regular investors.
The fd interest rate depends on different factors like the investment term the interest payout period you choose, and the investment amount. Typically, NBFC fixed deposit rates are higher for FDs with a longer investment term.
Let us understand the NBFC FD rates offered by Mahindra Finance in 2024 with the help of below table.
|
Investment Term |
Investment Amount |
Interest Payable |
Maturity Amount |
|
15 months |
Rs. 5000 |
7.75% p.a. |
5492 |
|
30 months |
Rs. 5000 |
7.90% p.a. |
6051 |
|
42 months |
Rs. 5000 |
8.05% p.a. |
6561 |
From the above table, it is evident that when you keep the investment amount constant, the longer you stay invested, the higher the interest rate offered and the larger your maturity amount.
If you are a senior citizen, you will get an additional interest rate of 0.25% per annum. And, if you or your relative is an active or retired employee of Mahindra Group, you are entitled to get an additional rate of 0.35% per annum on your fixed deposits up to Rs. 5 crores.
Final Word
A fixed deposit is a great investment option to grow your savings with zero risk. While you open an FD account, do your research well about the NBFC FD rates and choose the one that offers the best interest rates, like Mahindra Finance. So, go ahead and open your FD account today and take your first step towards achieving your long-term goals and securing your and your family’s future.
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