How to earn high returns on your fixed deposits?

Investments can be a great way to earn some profits. One can grow one's funds simply by investing it. And investing in fixed deposits is considered as a much safer option. This is because fixed deposits involve less risk and investing your funds in FD can be any day better than saving it.

Fixed deposits (FD) offered by banks are the easiest way and a commonly preferred means to save some funds in India. They are considered as a safer option as opposed to the stock market and mutual funds. But investing in a fixed deposit is a one-time investment where you invest the entire amount at the same time.

Moreover, the returns from a fixed deposit are high compared to a savings account. And the interest that banks offer you over your fixed deposit is fixed and doesn’t keep on fluctuating. Since these fixed deposit interest rates are not dependent upon the market rates they are considered a safe investment option. And you get a fixed interest return over your fixed deposit investment till the FD gets matured. Once your fixed deposit account is matured you can withdraw the funds.

Note that when it comes to investment in FDs, the interest rate is the most important thing to consider. Because your interest rate determines what returns you will be earning on your investment. Having a low-interest rate on your FD will earn you lower returns and similar a high-interest rate earns you high returns. It’s hence worth noting that the interest rates offered to differ from bank to banks. Some banks may offer you with high-interest rates whereas some may offer you a low interest on the same amount.

Now the interest rate that you are offered depends on two factors: investment tenure and the amount that you are investing. When it comes to investment tenure you have two options - A long-term investment tenure and short-term investment tenure. Depending upon the investment tenure you chose the banks will offer you an interest rate that affects your returns.

Moreover, after demonetization, the interest rates have gone down on loans as well as investments. Which can be a sad news for the ones who wish to invest their funds. If you are looking for a safer option then fixed deposits are the perfect place to invest in. But the news of low-interest rates can upset you and you might rethink about the investment decision.

Instead of going for an investment option which gives you higher returns even though it has high risk involved you can still go for fixed deposits. For this, it’s important that you make some changes in your investment plan. Also going for a short-term tenure can benefit you. This gives you a quick fund withdrawal as you don’t have to wait for a long time in order to withdraw your returns. As fixed deposits restrict you from withdrawing your funds going for a short tenure can be ideal. And in case if there is a financial emergency you can easily access your funds.

You can also go for NBFCs fixed deposit as they offer you higher rate of interest on FD as compared to a bank’s fixed deposits. Note that NBFCs offer you with 2% more returns than banks over a fixed deposit account. And investing in an NBFCs fixed deposit can get you extra funds. But NBFCs are less trustable as they are not banks. It’s important to check the background and also the ratings of NBFCs as they can be fraud and you don’t want to lose all your hard earned money.

Thus FDs remain a secure investment option. But it is essential that we do a thorough comparison of the terms offered by different banks before finalizing the investment.