By Niyati Mavinkurve
Rohini retired a few months ago and was looking for places to park her funds. She had enough invested for her retirement, but her expenses were lesser than her monthly pension income. She was looking for avenues to park the excess funds so that she could use them in the future when she needed more funds. Investing in the stock market was not advised, given the heavy correction, the stock market was witnessing. Besides, Rohini did not have the skills to choose the right stocks. Her daughter-in-law recommended her to open fixed deposit online as a safe avenue to park her funds for the short term.
Rohini had savings of around Rs. 5,000 a month, from her pension. The idea of investing in fixed deposits appealed to her. She checked out a fixed deposit calculator online and found an attractive interest rate for her money for 90 days. She quickly opened the FD online from the comfort of her home. She had the bank’s mobile app which made it easy for her to access all relevant details about her fixed deposit.
With improvements in technology, opening a fixed deposit in a bank branch is unnecessary. It is possible to open a fixed deposit online, via net banking. With a few clicks, it is possible to book a fixed deposit, when you select the duration and the amount to be invested.
What are Fixed Deposits?
Fixed deposits are sums of money blocked for a fixed period of time. The amount kept in a fixed deposit cannot be withdrawn before its maturity. Usually, banks have a pre-maturity withdrawal penalty, which is why it is not advisable to liquidate the fixed deposit before maturity.
Fixed deposits can be placed for as low as a week, to 10 years. Depending upon the period of the deposit, the rate of interest varies. Using fixed deposit interest calculators, it is possible to know the amount that will be received on maturity. Fixed deposits can be opened online for as low as Rs. 5,000.
Fixed deposits are an attractive option for small investors. Tax is deducted on the interest earned on fixed deposits only when it crosses Rs. 10,000. This protects small time investors from bearing tax.
There are also tax saving fixed deposits which have a maturity period of five years. The interest on these deposits is tax free. The principal is also deductible under Section 80C of the Income Tax Act.
Why booking online is the best option:
Opening a fixed deposit online provides benefits such as reinvestment of interest. While booking the fixed deposit, it is possible to choose the period of interest, whether it is credited quarterly or yearly. Banks offer options to reinvest the interest, thus earning a higher amount on maturity than with a simple interest calculation. In most cases, interest on fixed deposits above 6 months is credited quarterly. For fixed deposits below 6 months, a simple interest formula is followed.
While opening a fixed deposit online, with one click, funds can be seamlessly transferred from a savings account to the fixed deposit. This makes opening a fixed deposit a hassle free experience.
Getting a fixed deposit online is convenient because there is no hassle of maintaining certificates. The whole process is now online which means fixed deposit certificates are also online. It is also possible to renew the fixed deposits online. This makes it easy to manage investments from the comfort of your home, at your convenience.
This process of booking fixed deposits online is excellent for senior citizens because it eliminates the hassle of going to the bank branch and spending long hours waiting for the process to go through. Rohini, from the example above, didn’t have to face any problem. She booked the fixed deposit online without any hassles and avoided spending time in the bank. All the fixed deposit details were at her fingertips, which made data management easy as well.
The Reserve Bank of India raised repo rates in its recent review, which signals an increase in lending and deposit rates. With an increase in rates, fixed deposits have become an attractive investment option. Once the fixed deposit is opened, the rate is locked which makes the returns assured. For a retiree or senior citizen, having assured returns at the tip of their fingertip is the biggest boon of the technology revolution.
Featured Image Credits: Unsplash
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