When it comes to earning interests, savings accounts aren’t something every investor would consider. Fixed Deposits on the other hand, were always attractive to traditional investors, since they would assure a fixed and steady interest rate over a long term.
However, there is a changing trend in the market and many banks and other financial institutions are now offering higher interest rates on both Fixed Deposits and savings account.
The long Term Fixed Deposit Scheme
Owing to the steady returns on long term Fixed Deposit, this seems like a viable option when it comes to investing for the purpose of savings.
After de-regularisation of banks, the Fixed Deposit interest rates are dependent on the bank, and therefore, you as an investor have more options to check out before you settle on earning through high interest Fixed Deposit or savings account in India.
If you have been making use of savings account for your investment purposes, but have been tempted more often than not, to make a withdrawal, then you may reconsider your investment options. Owing to your withdrawal from your savings account, your interest rates may dip and rise, which may leave you with less than satisfactory returns at the end of the day.
Reaping The Benefits
There is a definite benefit that you can withdraw from a savings account any time, but then the purpose of saving in the first place would not be met. For such temptations, you can put a stop to them by opting for a long term Fixed Deposit account which promises you of assured returns at a steady interest rate.
You can also check with your financial institutions whether they have a scheme that would provide you with tax saver FD interest rates for your needs. A corporate Fixed Deposit account usually falls into that category.
There are few things that you can keep in mind before you opt for high interest FD account for investment purposes.
Compare the Benefits For Higher Returns
You can choose either a high interest paying savings account or go for high rates FD in India. To understand which suits you better, you can compare certain basic features of both the types of investments. Saving accounts are a low risk option and can be maintained on a day to day basis. However, frequent or unplanned withdrawals would affect the overall interest rates that would be applicable to your funds.
Fixed Deposits on the other hand can be opted for a long term and the interest on them is compounded quarterly. Also, according to Section 80C of Income Tax Act, 1961, if you have a Fixed Deposits account with a bank for more than 5 years, a deduction of upto Rs. Rs. 1,50,000/- (Rupees One Lakh Fifty Thousand) is allowed.
This way you can make use of tax saver FD interest rates if you choose to invest in a long term Fixed Deposit account.
Consider Your Individual Needs
Before you finalise either of the financial investment options, it is pertinent to consider your own financial goals and terminal requirements. If you already have some savings stashed, you can opt for a long term Fixed Deposit which can start accruing interest immediately. If not, then you can opt for high interests paying savings account by approaching your bank and begin your investment journey.
You can experience greater returns on the investments that you make, keeping these points in mind, and earn benefits of planning your finances properly.