Where to invest now when FD interest rates are falling3 min read . Updated: 17 Feb 2020, 01:17 PM IST
The benefit of investing in an FD now is that you can lock in at an attractive rate and earn returns steadily over a tenure of your choice.
Even though the Monetary Policy Committee announced no further change in the repo rate as of February 2020, seeing FD interest rates slip further should come as no surprise. This is because the MPC of the RBI announced Long Term Repo Operations (LTRO) during the meeting on February 5. Thanks to LTRO, banks will have access to durable liquidity at costs relative to the prevailing market conditions at the time. Experts say that while this is a good move to boost borrowing, LTRO is also likely to cause FD interest rates to fall.
The benefit of investing in an FD now is that you can lock in at an attractive rate and earn returns steadily over a tenure of your choice. However, you may find yourself at a crossroads, wondering which deposit will give you the best returns. To help you gain insight into the matter, read on.
Bank fixed deposit
The bank fixed deposit has always been a go-to option for many and in the present economic climate, its value is best observed in its ability to offer returns safely. In fact, Budget 2020 allowed for an increase in the deposit insurance cover from Rs.1 lakh to Rs.5 lakh. What’s more, if you’re looking to stick with the existing tax regime, then opting for the 5-year tax-saving FD is a top option it allows you to claim deductions under Section 80C of up to Rs.1.5 lakh. This means that you can work towards wealth generation and tax saving, hand in hand, albeit, at the cost of losing out on liquidity for 5 years.
Company fixed deposit
Even after a slew of repo rate cuts in 2019, company FDs still promise much in terms of wealth generation. Company FDs typically offer higher FD interest rates than bank FDs and also give you access to a range of additional value-added features. Further, while you do not enjoy compensation with an NBFC FD, you can ascertain the risk involved in investing by checking the credit ratings as given by agencies like CRISIL, ICRA, CARE, Brickwork Ratings, and India Ratings and Research Pvt. Ltd.
NBFC FDs that couple high interest rates with top ratings are truly valuable options as they promise generous yields, sans defaults. The quintessential example of this for many is the Bajaj Finance Fixed Deposit. In fact, Bajaj Finance has over 2.2 lakh customers, of which about 80,000 are senior citizens, and a massive FD book size of Rs.20,607 crore.
To help you understand the value of the FD, consider the following pointers.
Why you should opt for the Bajaj Finance Fixed Deposit
• You get market-leading interest rates
With this FD, your investments grow generously through the interest rate on offer. New customers and senior citizens obtain returns at a rate of 8.10% and 8.35%, respectively, on FDs booked for a minimum of 36 months years with payouts at maturity.
To give you a clearer picture of your potential earnings, consider the following example.
All the above-mentioned results were generated using the Bajaj Finance Fixed Deposit calculator.
• You enjoy an investment that comes with top credibility and stability ratings
Credit ratings distinguish the reliable from the risky, and Bajaj Finance has secured the highest ratings possible from CRISIL and ICRA, FAAA and MAAA, respectively. Further, Bajaj Finance also holds S&P Global’s ‘BBB’ rating, indicating that it is both safe and trustworthy.
• You can invest through bite-sized monthly deposits
Through the Systematic Deposit Plan feature, you can choose to invest as little as Rs.5,000 per month and work towards wealth generation. Here, you can make up to 48 deposits with a tenor ranging from 12 to 60 months on either the 3rd, 7th or 12th of every month. This feature works in a way that SIPs do, sans the risk.
• You enjoy additional value-added features
The multi-deposit feature lets you invest in several FDs through a single cheque and as you do so, you can set different tenures for each. Likewise, the auto-renewal feature allows you to stay invested for an extended period seamlessly.
So, if you’re looking to invest for future security, simply apply for the Bajaj Finance Online FD and await contact from an authorised representative.
Disclaimer: This content is distributed by Bajaj Finserv. No HT Group journalist is involved in the creation of this content.