How to Maximise Your Fixed Deposit Returns

The unprecedented COVID-19 pandemic has brought businesses to their knees. A lot of salaried individuals have either lost their jobs or endured a reduction in their income.

However, those who had invested part of their income into a fixed deposit account are less affected these days. Having an FD account is the best way to create wealth in the future and ensure financial security in times of need.

FD – fixed deposit

An FD account is one of the most popular investment avenues among Indian households. Much of its popularity stems from the fact that it guarantees returns. It is an account wherein you can put some of your income for a fixed period at an agreed interest rate. At the end of your FD tenure, you can get your invested money with compound interest.

So, if you have idle money at home, it would be wise to invest that into an FD account. It is a secure way to create wealth in the future. The best part about an FD account is that you can cater to your financial emergency by opting for a loan.

Here the ways to maximize your fixed deposit interest rates

Compare FD interest rates

Before investing your money into an FD account, make sure to compare the FD interest rates of different financial institutions, as they vary across different platforms. It is a common fact that financial companies are always competitive with FD interest rates. So, make sure to choose a financial company that offers the best interest rate in the market. Furthermore, it is crucial to ensure that your service provider has good credentials and can ensure the safety of our hard-earned money.

Open an FD account in your parent’s name

FD interest rates depend on several factors, including your age. To get a higher interest rate on an FD account, you must open an FD account in the name of your father or your mother. Financial institutions offer higher interests to senior citizens than young investors. Senior citizens over the age of 60 can avail of up to 8% interest rates on fixed deposits. So, opening an FD account under your parent’s name can help you generate more returns.

Opt for a short-term investment

Inflation has a direct impact on the rate of interest. As inflation rises, FD interest rates fall. Therefore, it would be wise to opt for a short-term FD to beat inflation and get a maximum return on your FD. Besides that, if you want to maximize your returns, you can choose to renew your FD after it matures.

Open multiple FD accounts

Another way to maximize your returns on your FD investments is by spreading your investment in multiple FDs. For instance, you can open FD accounts with both government and private financial companies. This way, you can lower the risk and ensure getting higher returns.

Choose cumulative FD over non-cumulative

The benefit of having a cumulative FD plan is that you can re-invest your interest and get extended compound benefits. So, if you are not a pensioner and do not require a regular income, it is better to opt for a cumulative fixed deposit and maximize your FD returns in the long run.