What is FD and How Digital Fixed Deposits Are Changing the Investment Landscape?
Of all the traditional investments one has in India, Fixed Deposits (FDs) have always been the favorite child. FDs are the investor’s safest bet to make sure-shot returns on excess funds. So, what is an FD all about, and how are online fixed deposits revolutionizing the investing culture in India?
Understanding Fixed Deposits
Fixed Deposit is a bank and non-banking finance company (NBFC) product under which depositor can invest his money for a definite period of seven days to ten years. For that defined period, the deposit money of depositor earns him an interest on a particular rate which is not affected by the fluctuations in the market. At maturity, the original money along with the interest earned is returned to the depositor.
For the beginner, one should realize that what is FD—it is a savings instrument with guaranteed returns on a fixed period, thus for risk-averse investors. FDs traditionally have been considered safe and secure. It is opted for by risk-averse investors who are concerned about capital security over possible greater returns from riskier investment tools such as the stock market. But FDs are not completely risk-free since the image of the institution also has a significant role to play in ensuring the investment remains safe.
The Evolution towards Digital Fixed Deposits
As banking technology evolved and digital interfaces became a reality, the situation of investing in India is also being transformed revolutionarily. The traditional FD model now has its digital-age equivalent in the shape of Digital Fixed Deposits, which provide security, convenience, and simplicity to investors.
Online FDs are the efforts of opening and running fixed deposits online. They speed up the tedious paperwork otherwise involved in opening FDs and allow investors to make transactions from home at their convenience any time of the day. Such ease has stretched FDs, and they are now available to everyone.
Advantages of Online Fixed Deposits
1. Convenience: Internet provision makes it convenient for investors to start and sustain their fixed deposits without exerting too much of their time and energy.
2. Comparison: Internet websites enable investors to compare interest rates and conditions provided by different banks, thus facilitating easy decision-making for them.
3. Instant Management: Investors can monitor their investments using mobile applications and online websites, which provide them with updated information regarding their returns.
4. Personalization: The majority of platforms provide personalized FD solutions based on investor preference, enhancing the degree of personalization in investment schemes.
Tax Saving Fixed Deposit as a Strategic Tool
Tax saving fixed deposit is a fixed deposit that not only gives certain returns but also reduces the taxable income. According to Section 80C of the Indian Income Tax Act, investments made in tax saving fixed deposit can be claimed up to INR 1.5 lakh. These are blocked for five years and after that, the investor can withdraw the principal and interest accrued.
Impact of the Digital Age on the Investment Scenario
Fixed deposits are streamlining investments, and they have become convenient and customer-friendly. The fact that people are merely changing from the old to the new mode itself is a revolutionary trend, reflecting the digitally aware citizens who look forward to solutions across the web.
Aside from that, since web-based competitive interest rates are found on these portals, investing in FDs now is the talk of the town. Banks and financial institutions are employing web technology to keep their customers and bring in more customers, endowing them with fresh capabilities and a better customer experience. The transition is making investors and instilling confidence among them to utilize the advantages of web solutions.
Disclaimer:
While investing in digital fixed deposits or any other financial instruments, one needs to learn the instruments analytically keeping in view his risk appetite and investment period. Its rate of interest, early withdrawal penalty, and the institution’s track record need to be learned thoroughly. Individuals need to go through the terms and conditions of digital FDs thoroughly before investing.
Fixed Deposits are conventional investment product that provides safe and stable returns on deposits for a specific duration. With the wave of digitization spreading its wings in the different industries, digital fixed deposits are providing unparalleled convenience and accessibility to investors. As were always managed by banks, FDs now come in the form of digital ones, which are present in one’s hand everywhere at all times. Tax-saving fixed deposits also offer strategic tax advantages to investors, as well as being attractive to tax-saving investors. Based on the varying investment situation of India in earlier years, even digital fixed deposits are now proving to be an essential component with suitable rates and customized investment deals. Investors need to read pros and cons before they place their bets on digital FDs.
Investment in securities is with certain risks and rewards. Investors need to do their own research and due diligence to equate investments with financial goals.
