AnyTV Bureau, New Delhi.
Published by: Dev Kashyap
Updated Mon, 07 Mar 2022 06:51 AM IST
Summary
If you do not want to take risk in investment then FD can prove to be a better option for you. Not only does interest come in this, but you can also take advantage of many other benefits at the same time. If you have FD in any bank, then you can take loan or overdraft facility on it if needed.
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Traditional modes like Fixed Deposit (FD) are still considered as a better investment option in the country. The risk involved in investing in this is low and there is a guarantee of getting a fixed interest. However, in the hope of getting higher returns, many people recommend investing in mutual funds or other places instead of getting FDs. There is also the risk of risk in such investment instruments.
In such a situation, if you do not want to take risk, then FD can prove to be a better option for you. Not only does interest come in this, but you can also take advantage of many other benefits at the same time. If you have FD in any bank, then you can take loan or overdraft facility on it if needed. Many banks also provide insurance cover in this.
- Loan or overdraft facility: Many banks offer overdraft facility on FD basis. FD is like a guarantee. This means that if you are unable to repay the loan, then the loan amount will be deducted from the amount deposited in your FD. If you compare FD with any other investment, keep in mind that you can get loan against FD.
- Insurance cover: Bank FDs come with an insurance cover from the Deposit Insurance and Credit Guarantee Corporation (DICGC). If your bank defaults or becomes insolvent, you will get up to Rs 5 lakh under this insurance cover. This will include both principal and interest. This means that you will definitely get a guarantee. There will also be a guarantee of getting back up to Rs 5 lakh.
- Free Life Insurance: There are many banks that offer the added benefit of free life insurance on getting an FD. Banks give such offer so that they can attract more and more people towards FD. Under this, they offer life insurance equivalent to the FD amount to their customers. There is also an age limit in this.
- Tax exemption benefits: If you make an FD for 5 years or more, then you can claim tax exemption under Section 80C of the Income Tax Act, 1961. Under this, you can take tax exemption up to Rs 1.5 lakh in a year. However, if you make an FD of less than 5 years, then you will have to pay tax. If the interest received from various banks in a year exceeds Rs 40,000, then it will also be taxed.
- Guaranteed Returns: Guaranteed returns are available in FDs. If you are planning after 5 or 10 years or any number of years then in FD it is known that how much amount you will get on maturity because FD gives fixed return. At the same time, the returns in investments like Mutual Funds, NPS, ELLS keep on increasing every year. The returns on such investments depend on the movement of the stock market.