How Fixed Deposit gives you steady & assured returns?


With assured returns and simplicity of investing, fixed deposits (FDs) are one of the best investment products. FDs unlock mass investing interest for the safety of funds and earn at a fixed interest rate during the entire tenure. 

As per the report ‘Future of Fintech July 2022’, FDs continue to hold the largest share at 18% of the total financial wealth in India. The technological solutions are improving investor literacy which could emerge as an important growth driver of FDs. 

Let us elaborate on steady and assured returns on FDs.

Fixed Returns for Fixed Tenure

  • With FD investment, depositors get returns at a fixed rate of interest. FD rates are pre-determined by the banks. The applicable interest rate on your FD will depend on your type of FD, lock-in period, and deposit amount. The rate of interest in FD will be fixed for the entire tenure of your choice, provided you do not make a premature withdrawal. 
  • Once the interest rate is applied to your FD, the returns on your invested capital will remain the same irrespective of market conditions. It is a big relief for risk-averse investors as most investment avenues provide market-driven returns. 

Using an online calculator, you can calculate fixed deposit returns quickly. It allows you to calculate your returns before investing and make an informed decision with greater transparency.  

Steady Income Flow

FD is one of the safest investment options that offer you a regular income. An FD is a sure-shot and safe way to get fixed returns. An FD can provide you with a regular and stable income also. The key to capturing a steady source of income is choosing a non-cumulative FD. 

A non-cumulative FD allows the depositor to receive interest amounts periodically. This is a beneficial feature for dependents, like senior citizens, on their investments. They can ensure the safety of their lifetime earnings and keep getting returns periodically. 

Senior citizens need investments that offer assured returns. FDs do not just offer security to their funds but also provide higher returns. It makes a great choice to enjoy their later years of life. Banks offer higher rates of FD for senior and super senior citizens as compared to regular investors. Senior citizen Fixed Desposit is for individuals aged 60 to 80 years and super senior citizen FD is for individuals aged 80 years and above. Senior investors can earn 0.50% more on their FDs, and super senior citizens can earn 0.75% more.

Depending on your financial requirements, one can opt for quarterly/half-yearly/yearly interest credit to their account. 

Reinvestment Option 

FDs offer a cumulative interest option. You can invest in a cumulative FD to earn interest on your interest amount earned. It will keep reinvesting your interest with the principal in the FD, and you will reap the benefit of compounding over the tenure. 

If you need your funds before maturity, you can withdraw your funds prematurely. However, there will be a penalty for premature withdrawal. As a solution, you can use an overdraft facility and keep earning at the fixed rate of interest in FD. You can avail of an overdraft or credit card facility against your deposit to get funds up to 90% of the FD value. This percentage can differ with different banks and for different types of FDs.

Types of Fixed Deposits

You can choose an FD investment as per your financial needs. Following are the common FD types offered by the banks:

  1. Regular Fixed Deposit: It is an FD that can be opened by any Indian citizen looking for a regular fixed income at an attractive interest rate. As per your needs, you can choose to receive interest payouts monthly, quarterly, or annually or keep it invested till the end of the tenure. Tenure of Regular Fixed Deposit can be between 7 days and 20 years. Facilities like a nomination, overdraft, partial/premature withdrawal, etc., are offered to depositors. 
  2. Flexi Sure Fixed Deposits: It is an FD linked with your savings account that offers you the power of liquidity. Banks allow linking multiple deposits to your account. The linked FD is partially broken to meet the shortfall in your savings account, and the remaining amount will continue to earn interest. 
  3. Tax-saving Deposit: These FDs offer tax exemption under section 80C and are offered with a lock-in period of five years without a premature withdrawal facility. 
  4. Senior citizen FDs: These are specially designed FDs for senior citizens in the age group of 60-80 years. Earn more at an additional interest rate of 0.50%.
  5. Super senior citizen FDs: These are the FDs for super senior citizens above 80 years, offering an additional interest rate of 0.75% over regular FD interest rates.

Thus, you can consider FDs to build a profitable and risk-free portfolio. Determine your financial needs and choose the right type of fixed deposit. Calculate your stable and assured returns over the tenure using an online FD calculator for free on your bank’s website.