Fixed deposits have a fixed maturity time, hence the name. According to consumer’s investment portfolio, the FD investment period can either be short or long term. The interest rates on fixed deposits depend on and vary from one company/bank to another.
Fixed deposit investors need to keep in mind, that they cannot withdraw money before maturity without financial repercussions. In case of emergencies, the payment of penalties is applied before the early withdrawal is made possible.
Types of FDs Available
Given below are some of the most preferred options open to prospective investors.
Corporate fixed deposits
These fixed deposit schemes are held by companies, and not banks. Its other name is company FDs, investing in such schemes, may, in some cases, lead to higher returns.
Standard fixed deposits
Standard plans, as the name suggests are basic investment schemes, where you invest a fixed amount with a financial institution. Once the fixed maturity period expires, you are eligible to receive the principal amount, along with the interest earnings from investing in the scheme.
Senior citizen fixed deposit
This scheme includes the individuals aged over 60 years, who are also eligible to invest in fixed deposit instruments. However, most plans that belong to this category offer flexible tenure options. Along with that, senior citizen investors can have higher interest rates on their investments when compared to the standard schemes.
Tax-saving fixed deposit
If your primary goal of an investment is to save taxes, then in such a case you can take advantage of tax-saving FDs. However, the most you can deposit for such plans is limited to Rs. 1.5 Lakh per year. The lock-in period for FD’s that fall under this category is 5 years.
Cumulative fixed deposit
In these fixed deposit schemes, compounded quarterly, half-yearly, or yearly interest is offered to the investor. But, the total interest earnings are paid at the time of maturity. Opting for such FD schemes allows you to build your corpus considerably.
Non-cumulative fixed deposit
Interest earnings are paid out monthly, quarterly, or half-yearly in these fixed deposit schemes. This option is best for investors who are interested to have a regular source of income from their investment. Therefore, pensioners can benefit from such schemes.
Flexi fixed deposit plans
In this fixed deposit scheme, the deposit moves between a savings account and an FD account. Therefore, to initiate an investment using Flexi FD’s, investors are required to join their fixed deposit account with the savings account they have. Investors can take benefit of high-interest rates over their deposits along with liquidity with this scheme of FD plans.
NRO fixed deposit account
Non-resident Indians can invest in such FD schemes by depositing their earnings generated from India in an NRO FD account. The interest earned from these FD account schemes can be repatriated entirely by NRO account holders, and the principal amount can only be repatriated up to a certain limit.
NRE fixed deposit account
NRIs can invest their income generated abroad in an NRE fixed deposit account. In this case the interest and principal are repatriable.