Fixed deposits (FD)
FD is an investment option given by banks and no banking financial companies, where you can invest a fixed amount for a fixed period of time for a higher rate of interest than a savings account.
The tenure of fixed deposit could vary from 1 year to 20 years.
Types of fixed deposits
- Regular Fixed Deposit
This FD is for those people whose age is below 60 years and they get a regular interest on such fixed deposits.
- Flexi Fixed Deposit
There is a swipe in facility available in such type of fixed deposits. This flexi FD is directly linked to your savings account. Whenever the balance in your savings account crosses the threshold limit , then the excess amount is transferred to a fixed deposit automatically by the bank. And once the threshold decreases the amount gets transferred back to the savings account. This helps you earn a better interest rate on the amount invested .
- Tax Saving fixed Deposit
This is somewhat similar to PPF. In such type of FD you get a tax exemption of 1.5 lakhs u/s 80C. and it has a lock in period of 5 years which means that you cannot withdraw your money before the completion of 5 years.
- Senior Fixed Deposit
This is for those citizens whose age is above 60 years. And it also provides an extra interest rate varying from 0.25% to 1%.
- Shareholders’ Fixed deposit
This is not provided by Banks rather it is given by only Corporates , NBFC and HFC. This is available only for those people who are the shareholders of such companies and it also provides an extra interest rate varying from 0.25% to 1 %.
Recurring deposits (RD)
Recurring deposit is an investment option offered by banks which allows people to invest a Recurring deposits fixed amount every month for a predefined period of time and earn decent returns on their investment.
Types of Recurring deposits
- Simple Recurring deposits
This RD is available for those who are 18 years of age and above. All you need to di is you have to go to a post office near by and fill a form of RD and attach the documents required.
- Senior citizen Recurring deposits
This RD is only for the senior citizens of the country. Here you get an incentive of 0.50 on every type of interest
- Child Recurring deposits
This is for those who are below the age of 18 years. Parents can open a RD in the name of their child and can transfer this RD once the child turns 18.
- Special Recurring deposits
This RD is provided by only few banks where along with RD , insurance is also provided to the recipients.
Benefits of Recurring Deposit
- Flexibility of investment
- Fixed interest rate
- Tax Benefit
- Fixed duration of the investment
- Fixed monthly investment option
- Best for short term goals
- Simple documentation
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