Time Deposit, also known as fixed deposit, is a financial instrument offering fixed returns at a pre-determined interest rate for a fixed period of time. There is no difference between fixed deposits and time deposits.
Whenever a lump sum investment is considered, the first thing an investor looks for is a risk-free investment. Banks and other financial institutions offer time bound investments on which they pay a consideration, i.e., interest. These are ‘time deposits’ (time bound deposits), commonly known as fixed deposits. The ‘time’ component can be chosen by the investors as per the available tenors. The end period of this time is called Maturity.
Fixed Deposits offer a high rate of return with a flexible maturity period ranging from 7 days to 10 years (in banks), and the rate of interest varies with them accordingly. There are also company time deposits called Company Fixed Deposits like Bajaj Finance Fixed Deposit. Tenor for these deposits ranges from 12 months to 60 months.
Though being taxable, there are measures to gain rebate on Tax Deducted at Source applicable on the interest earned on time deposits. There are various types of time deposits such as regular time deposits/FDs, tax saving time deposits/FDs (with a lock-in of 5 years) and senior citizens time deposits/FDs. Each of these can be chosen with a cumulative or non-cumulative option.
Bajaj Finance offers 8.75 % rate of return on FDs with the extra advantage of a hike of 0.25% on each renewal. Apart from that, it serves an additional benefit to senior citizens of 0.35% interest rate.
Here are some of the benefits which you can derive by investing in Time/ Fixed Deposits:
- High Interest – Fixed deposits offer assured returns, which are generally higher than the returns on a savings account. Further, returns may vary as per the term of maturity. Currently, banks offer returns ranging from 5.25% to 7.5%.
- Flexible Tenors –You have the flexibility to fix the maturity period, which can range from 7 days to 10 years. However, each bank consists of different tenor criteria.
Since the interest rate offered on medium to long term FDs is much higher than savings accounts, it makes sense to use these instruments to make your money work and generate superior returns by going for longer tenors. Short tenors with Bajaj Finance FDs will help you protect your funds against inflation and earn good returns.
- Safety and stability – Many financial instruments like mutual funds and equity stocks offer a high rate of return, but they aren’t guaranteed. Therefore, time deposits are considered to be one of the best risk-free investments with a fixed rate of return and flexible maturity timeline. Bajaj Finance FD is accredited for its safety and stability by CRISIL and ICRA.
- Loans against time deposits – FDs not only enhances wealth but also provide financial security in times of emergencies. Loans can be taken against FDs in situations of urgency. Mostly loans offered ranges from 60% to 90% of the maturity amount of the fixed deposits. Bajaj Finance FD offers loan up to 75% of the maturity value.
- Immunity against markets– Even if market interest rates are falling, it won’t affect your investment in times deposit.
- Periodic interest payouts- Time deposits offer the flexibility to choose periodic interest payouts. In case of a cumulative option, the interest earned during the period gets added to the principal amount. Whereas in case of non-cumulative fixed deposits, you can seek a payout at every interval (monthly, quarterly or yearly) and this will reduce the re-invested amount by that much amount from your interest.
You can invest in Bajaj Finance Time Deposit with Experia- your online fixed deposit account. The online portal also allows you to manage and track multiple deposits. You can make an online time deposit with just Rs 25,000 with an assurance to enhance your wealth with the above advantages. You can use the FD calculator monthly interest to know the exact returns over any time period and amount.