How to Get Better Returns by Investing in a Fixed Deposit?

Posted on Friday, May 21st, 2021 | By IndusInd Bank

For years, fixed deposit or FD has been quite popular among consumers looking for guaranteed returns in a relatively risk-averse way. So, FDs rose to popularity as a safe investment option; however, with increasing consumer awareness, this notion is changing. Now, the fixed deposit scheme is gaining popularity for its potential higher returns as well.

Almost every bank in the country offers a fixed deposit scheme with varying amounts of the interest rate. Also, you get to invest a certain minimum and maximum deposit amount for different tenures that are usually flexible. You must consider every aspect related to the FD before investing your money in any scheme. And to help you draw better returns by investing in a fixed deposit, here are a few tips:

Managing Your FDs Helps

• To yield better returns from a fixed deposit, it is essential to manage your FD. Reinvesting and laddering are two prime weapons of consumers to manage their fixed deposits. You can put your money back into the fixed deposit scheme upon maturity, and it is called reinvestment. This requires you to monitor your investment continuously and manage your account. Nonetheless, IndusInd Bank customers can avoid these hassles by opting for the auto-renewal facility. Besides, you can book the deposits through mobile banking or IndusNet for extra convenience.

Income Tax Returns can Impact Your FD Returns

• Being particular with filing your income tax returns can help you earn higher returns from FDs. Now and then, the FD tax implications tend to modify which directly impacts the amount of return you will receive on the deposit. So, you must be well-versed with the same to make the most out of the investment. At IndusInd, we offer tax-saver deposits (up to Rs. 1,50,000). You can also avail tax exemption if you fall under the low-income population. Further, by filling your ITR with Forms 15G or 15H, you may receive tax exemptions.

Cumulative FDs may Yield Better Returns Than Non-cumulative FDs

• Non-cumulative fixed deposits are ideal for people who are looking for regular income from their FDs. You can take advantage of the flexible payable interest with IndusInd Bank. We offer annual, quarterly, half-yearly, and monthly interest payout options to our customers, apart from the ‘at maturity’ variant. On the other hand, cumulative FDs enable you to compound your interest by reinvesting the interest, along with the principal amount. You, thus, receive more returns on the FDs.
• Cumulative and non-cumulative FDs are meant for different groups of the population having different long-term goals. For example, pensioners can benefit more from the non-cumulative FDs than the cumulative ones. You must do your math before parking your money in a fixed deposit.

Laddering Fixed Deposits

• A typical way to enhance the returns on FD is to divide the single deposit amount into multiple FDs. This process, laddering, allows you to enjoy liquidity at regular intervals with certain tax benefits.
• As FDs are largely meant as a long-term investment for higher returns, the liquidity period usually poses as a disadvantage for the consumers. However, through laddering, you can overcome this shortcoming as well. We offer multiple fixed deposit schemes to provide you with the flexibility to invest your money as you wish. So, you can leverage higher returns with reduced risks of premature withdrawal losses.

If you follow these tips, you can receive considerably higher returns on your fixed deposits.  Our customers enjoy competitive interest rates as high as 6.5% and several other notable benefits on our fixed deposit schemes. Also, senior citizens can benefit from IndusInd’s special rates which go up to 7%. So, with IndusInd Bank, earn guaranteed and high returns on your investments and watch your money grow steadily.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.