Should you Keep Cash or Invest in an FD during the Lockdown?

A fixed deposit offers a fixed and secured return on the principal amount. There is flexibility to withdraw the deposited money at a short notice for immediate requirements.

For both risk-lovers and averse investors, fixed deposits or term deposits help in striking the right balance in your investment portfolio. It is good to invest money but during the ongoing pandemic where a lot of people have lost their jobs, some desperate measures are the need of the hour. To survive such hard times it is imperative to have cash handy. The economy is suffering a major hit due to COVID-19 and many are facing major consequences due to illiquidity.

Comparison Between

Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund

Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund

Guaranteed Return Plans

Returns Before Tax

7.5% ^(TAX-FREE)

Returns After Tax

7.5%

Guaranteed Returns

Yes

Life Cover

Yes

Tax on Profit

Tax Free*

Risk

No Risk

Still Better than FD’s and Debt Mutual Fund

Fixed Deposits

Returns Before Tax

7% ^(TAXABLE)

Returns After Tax

4.8%

Guaranteed Returns

Yes

Life Cover

No

Tax on Profit

Taxable

Risk

Low Risk

Debt Mutual Fund

Returns Before Tax

8% ^(TAXABLE)

Returns After Tax

5.5%

Guaranteed Returns

No

Life Cover

No

Tax on Profit

Taxable

Risk

High Risk

VIEW PLANS

*For annual premium upto ₹5 Lacs

Wait before Going for Long-Term Investment Options

Amid the growing uncertainties, it may not be a sensible decision to put all your savings in a bank FD or any other long-term saving schemes like Provident Funds, Fixed Deposits, right now. The purpose of these investments is simple as they serve well when their duration is completed as it can lead to a cash crunch before the maturity of the deposit, and this might be the last thing that we need today.

And if you have already invested in a fixed deposit scheme then you don’t need to take out your money right away. During the pandemic, the rate of interest on FD has been reduced and may fall further as the situation worsens. It seems unlikely that the interest rates that you were getting on your FDs 2-years back will reflect anytime soon. So continue with your investment unless it is otherwise.

For the Elderly People and Retirees

In case you have recently retired and have a good gratuity amount with you then you skip investing in a fixed deposit. FD interest rates can crash anytime and you will be left with meager interest income that is of no use. If you don’t have a regular income then it might not be favorable to lock your money in a bank FD. You may need cash to meet a medical emergency and any other financial crisis.

If you have a flowing income and sufficient funds then you should definitely invest in an FD. But before that you need to take care of the following points:

Check the Minimum Deposit Amount

The minimum and maximum deposit amounts vary for different banks and financial institutions. It is suggested to check with the bank before investing your money. For example, the State Bank of India (SBI) has a minimum fixed deposit amount of Rs 1000.

Check the FD Interest Rate

Fixed deposit scheme provide interest on both cumulative as well as non-cumulative basis, depending on the choice and preferences of the applicant. You can opt for non-cumulative schemes if you are looking for a regular income on an annual, half-yearly, monthly, and quarterly basis. If your motive is savings and earn returns over a long period of time then you can opt for cumulative schemes, which pay the principal amount and accumulated interest on maturity.

The company has the discretion to change the rates of interest and FD interest rates offered by HFCs and Corporates are higher interest in comparison to the bank FDs.

For example, SBI Bank FD Rates before investing in fixed deposit scheme.

Nomination

If you are the sole investor then you should nominate someone from your family who can claim the amount along with the interest earned post your unfortunate death while the FD is in force.

Tenure

You can invest in a bank FD for a duration of 1 year to 10 years. You need to carefully choose the tenure, as premature closure would mean a penalty, which reduces the total interest amount earned on your FD. For instance, if you think you would require the money after a period of 1-2 years, and then you can opt for an FD tenure of 2-years or less.

Monthly Interest Payout on FD

Fixed deposits are offered by almost all banks in India. With minimal documentation, a bank FD can be opened. Some banks offer fixed deposits with monthly payouts. Only if you have surplus funds you

should divert your funds from bank savings account to fixed deposits as the interest paid is comparatively higher but still low. You can opt for a fixed deposit in the same bank in which you have your savings account and other banks like HDFC Bank Fixed Deposit, Axis, SBI, Axis, etc. You can opt for annual and

quarterly returns in addition to the monthly returns. When you opt for monthly returns, you should make a lump sum investment. But if you need an alternative source of income then you go for the monthly payout option on your fixed deposits. Nowadays, it is easier to find out the monthly returns on your FD with an online fixed deposit calculator.

Check out the below steps to help you calculate your monthly payout interest on your FDs-

• Visit the bank’s website where you have an FD account or want to open one

• Select the FD option

• Select the FD calculator option

• Select the FD amount

• Enter the desired tenure

• Select the monthly payout the interest option

• The online calculator will give you the estimation of monthly interest payouts as per the current interest rate.

In a Nutshell

If you have surplus savings then it makes sense to park funds in bank FD. And if you are unsure about your savings then you should keep the cash flow and skip the fixed deposit option till the pandemic settles and the economic situation improves. During such unprecedented times, it does not make sense to make investments in haste; you should assess your financial situation and then make an informed investment that offers sustainable returns.

Bank FD Interest Rates

Bank FD Calculator

NRI-NRE FD Rates

Allahabad Bank FD Interest Rates

Andhra Bank FD Interest Rates

Assam Gramin Vikash Bank FD Interest Rates

AU Small Finance Bank FD Interest Rates

Axis Bank FD Rates

Bajaj Finance FD Interest Rates

Bandhan Bank FD Interest Rates

Bangiya Gramin Vikash Bank FD Interest Rates

Bank of Baroda FD Interest Rates

Bank of Ceylon FD Interest Rates

Bank of India FD Interest Rates

Bank of Maharashtra FD Interest Rates

Baroda Gujarat Gramin Bank FD Interest Rates

Canara Bank FD Interest Rates

Capital Small Finance Bank FD Interest Rates

Central Bank of India FD Interest Rates

Citibank FD Interest Rates

City Union Bank FD Interest Rates

Corporation Bank FD Interest Rates

Dakshin Bihar Gramin Bank FD Interest Rates

DBS Bank FD Interest Rates

Dena Bank FD Interest Rates

Dhanlaxmi Bank FD Interest Rates

Equitas Small Finance Bank FD Interest Rates

ESAF Small Finance Bank FD Interest Rates

HDFC Bank FD Interest Rates

HSBC FD Interest Rates

ICICI Bank FD Interest Rates

IDBI Bank FD Interest Rates

IDFC First Bank FD Interest Rates

Indian Bank FD Interest Rates

Indian Overseas Bank FD Interest Rates

IndusInd Bank FD Interest Rates

Jana Small Finance Bank FD Interest Rates

Karnataka Bank FD Interest Rates

Kerala Gramin Bank FD Interest Rates

Kotak Mahindra Bank FD Interest Rates

Lakshmi Vilas Bank FD Interest Rates

Muthoot Capital

Nainital Bank FD Interest Rates

Odisha Gramya Bank FD Interest Rates

Paschim Banga Gramin Bank FD Interest Rates

Paytm Payments Bank FD Interest Rates

PNB FD Interest Rates

Prathama UP Gramin Bank FD Interest Rates

RBL Bank FD Rates

Saurashtra Gramin Bank FD Interest Rates

SBI FD Interest Rates

Shriram Finance FD Interest Rates

State Bank of Hyderabad FD Interest Rates

State Bank of Mysore FD Interest Rates

State Bank of Travancore FD Interest Rates

Syndicate Bank FD Interest Rates

Tamil Nadu Grama Bank FD Interest Rates

Telangana Grameena Bank FD Interest Rates

Tripura Gramin Bank FD Interest Rates

UCO Bank FD Interest Rates

Ujjivan Small Finance Bank FD Interest Rates

Union Bank of India FD Interest Rates

Uttar Bihar Gramin Bank FD Interest Rates

Uttarakhand Gramin Bank FD Interest Rates

Vijaya Bank FD Interest Rates

Yes Bank FD Interest Rates

Expand

Allahabad Bank FD Calculator

Andhra Bank FD Calculator

AU Bank FD Calculator

Axis Bank FD Calculator

Bajaj Finance FD Calculator

Bandhan Bank FD Calculator

Bank of Baroda FD Calculator

Bank of India FD Calculator

Bank of Maharashtra FD Calculator

Canara Bank FD Calculator

Central Bank FD Calculator

Corporation Bank FD Calculator

Equitas Small Finance Bank FD Calculator

HDFC Bank FD Calculator

ICICI Bank FD Calculator

IDBI Bank FD Calculator

IDFC Bank FD Calculator

Indian Bank FD Calculator

Indian Overseas Bank FD Calculator

IndusInd Bank FD Calculator

Karnataka Bank FD Calculator

Karur Vysya Bank FD Calculator

Kotak Bank FD Calculator

Mahindra Finance FD Calculator

OBC Bank FD Calculator

Odisha Gramya Bank FD Calculator

PNB Bank FD Calculator

SBI FD Calculator

Shriram Finance FD Calculator

Syndicate Bank FD Calculator

Tripura Gramin Bank FD Calculator

UCO Bank FD Calculator

Union Bank FD Calculator

Yes Bank FD Calculator

Expand

HDFC NRE FD Rates

Maybank Malaysia FD Rates

SBI NRI FD Rates

Axis NRI FD Rates

Maybank Singapore FD Rates

Yes Bank NRI FD Rates