A Guide on How to choose the Right Fixed Deposit for you

If you wish to achieve your financial goals in a practical, attainable manner, it is important to take realistic steps. One of the most important aspects of solid financial planning is investing in secure and safe investment instruments, such as Fixed Deposits or FDs. Fixed deposits might not be a means for long term wealth creation, however, they are a secure place to put your money with the aim of preserving your capital. Investing in fixed deposits is a practical way to ensure that you get guaranteed assured returns.

When it comes to choosing the right fixed deposit, there are certain factors that you must take into consideration. Here is how to choose the right fixed deposit for yourself-

  • Choosing the right interest rate

FD interest rates are crucial when it comes to deciding the apt investment plan for yourself. Ensure that you opt for a financer that gives you a bare minimum FD interest rates to match the PPF interest. Along with the Fixed Deposit interest rates, also take into account the flexibility of the tenure, minimum amount that is required and security of the fixed deposit.


  • Selecting a credible lender

It is important to assess and gauge how credible and trustworthy your lender is. Make sure that you check the safety rating of your fixed deposit. Before choosing a fixed deposit plan, look into these safety ratings such as CRISIL’s FAAA and ICRA’s MAAA, which are awarded to the company FDs on the basis of factors such as maturity profile, renewal rate, liquidity. These ratings enable you to select an FD plan that is safer and offers more stability.


  • Easy application process

When it comes to selecting a fixed deposit plan, the simpler the process of application, the better it is. It is ideal if you do not have to submit too many forms or documents. Application procedures vary from one lender to another; while some procedures are online, others require visiting the lender in person. Select the process which suits you, preferably involving minimal steps.

  • Cumulative vs Non-Cumulative

There are two kinds of fixed deposit plans that you can select from - cumulative and non-cumulative. Cumulative fixed deposit will compound your interest over the course of your tenure, and pay you back at the maturity or lapse of the same. They also offer higher interests.

On the other hand, non-cumulative fixed deposit, you receive your earnings periodically, either on a monthly, quarterly, semi-annual or annual basis. So depending on personal preference, whether you wish to earn periodic returns or want to get interest at maturity, you can select between cumulative or non-cumulative fixed deposit option.

Keep all these factors in mind when you wish to choose the right fixed deposit plan for you to invest in. Among the various stable investment options, one could fetch interest with the least amount of risk in a fixed deposit plan. Fixed deposits will help you move closer to towards attaining your financial goals in a secure, stable and healthy way. They are not risky, and therefore you can be rest assured that your hard earned money will be in a safe place.

Leave a reply