How Can Check The Best FD For Long-term Investment?
FD is a trusted investment tool in India. People choose to invest in an FD as it promises a stable income over a certain period while being immune to market fluctuations, unlike an equity investment.
Short-term And Long-term FD
In a short-term FD, you invest some money in an FD for a short tenure (7 days to 2 years). This product will suit you if you require some short-term cash and need to raise it without too much delay.
In a long-term FD, however, the tenure will be longer. It can go up to even 10 years. If you require a substantial fund over a long period, then you should go for this option. You can avail of the best FD rates in a long-term option (generally 60 to 71 months).
Long-term FDs also offer better tax-saving options. You can avail of overdraft facilities against your FD. Many senior citizens prefer this mode as they earn highest fd interest rates than others.
What Factors Does FD Interest Earning Depend On?
FD interest-earning depends on the amount you invest and the tenure that you choose. And for the same parameters, different banks might offer different rates. A prospective investor can use an FD calculator to determine how much interest he/she can earn at the end of every specified period.
Banks, on average, start their FD interest payout at around 3.50% per annum, for tenures as low as 7 days to 45 days. The payout usually is 0.50% higher for senior citizens.
As the tenure rises, so does the interest payout. Long-term FD investment will always fetch you the best FD rates that the bank can provide. For the highest tenures (84-120 months), the interest ranges typically between 6.5% and 7.3% per annum (0.50% higher for senior citizens). In some instances, banks might go up to 8.5% per annum for a tenure of 120 months.
In general, Non-Banking Finance Companies (NBFCs) offer a higher rate of interest as compared to banks (2% to 2.5% per annum higher, to start with). On higher tenures, they can offer interest rates close to 9% per annum. However, the credit rating of the respective NBFC will determine how much interest payout they can provide.
To conclude, you must keep in mind that a long-term FD will always fetch you higher rates. Before you invest, check out the schemes on offer from different banks and use an FD calculator to find the final amount due to you. Chalk out how much you can invest without discomfort and be clear about your aim of making this FD. If you have done a thorough homework on these lines, your investment will bring you smiles for sure!