Lower interest rates on Fixed Deposits. Should you invest in it now?


When it comes to investments fixed deposits are the most preferred one. People often choose fixed deposits as an investment as it is a much safer option. Though fixed deposit involves less risk it also provides you with higher returns.
Instead of saving your surplus funds you can any day go for investing it as it helps you in earning profits. The interest rates offered on a fixed deposit investment is much higher compared to interest rate offered on a savings account. The interest rate on fixed deposits stays constant throughout the investment tenure. Fixed deposit interest rates don’t depend on the market condition. Whereas interest rates offered on other investments do depend on the market condition which makes them risky. The market conditions keep on changing which can result in a loss at times. If the market rates fall down one can gain loss whereas if it rises one can have profits.
Interest rates provided by banks on fixed deposits differ. Some banks may offer you high-interest rates whereas some may offer you with low-interest rates. Interest rates usually depend on the amount that you are investing. Your FD investment returns will be high if you invest a lump sum amount. Banks may also charge you taxes if you are offered interest rates above INR 10,000. In such a case you can split the amount and invest it in different fixed deposits.
Fixed deposit investment in 2017:
The investment tenure you choose also depends on when it comes to the interest rate. If you chose to invest for a long-term period the returns you earn will be high whereas choosing a short-term investment can offer you fewer returns. You can also go for reinvesting your funds after the maturity of the existing fixed deposit. This will save you from taxation and can benefit you with higher returns in future. As the market faces ups and downs many want to invest in fixed deposits as they are considered less risky. But after the demonetization fixed deposits have really become a question of investment. During the demonetization, PM Modi had announced to lower down the interest rates offered on fixed deposits. The interest rates were brought down from 0.1 %. Earlier the interest rates offered on fixed deposits were about 8.8 % and now the interest rates are 8.7%.
Whereas the interest rates offered on senior citizen FD has been increased. The Indian government says to fix interest rates up to 8 percent if the amount invested is up to INR 7.5 lakh by a senior citizen. This can be a great opportunity to invest as the interest rates have increased for the senior citizen.
This interest rate would be provided only when you go for a 10-year investment tenure. The government would provide you with 8% of interest rate every year if you plan to invest INR 7.5 lakhs in a senior citizen fixed deposit. The interest would also be provided on monthly basis instead of yearly bases. If you are a senior citizen then this can be a great opportunity to invest in fixed deposits.
Since the interest rate has gone low for others over the fixed deposit account you can either wait for the rates to go high or if you are planning to invest a lump sum amount you can go for splitting the amount and then investing it. This will help you earn higher returns. In case you still wish to earn higher returns you can also go for investing in NBFCs fixed deposits as they offer you with 2% extra interest. For example, NBFCs offers 8.05% interest on their FD’s. This will help you earn higher returns compared to banks. Thus, one can prefer going for NBFCs fixed deposit investment if they want to earn higher returns.

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