Tag Archives: Fixed Deposit

Did you know that 40% of Indian investors prefer fixed deposits over mutual funds, yet only 15% fully realize the long-term growth potential of mutual funds?  While FDs are MCs with assured returns, mutual funds hence open channels for wealth generation through marked based products.   To introduce you to what to expect in this blog, the basis for understand ing the comparison between mutual funds vs fixed deposit will be grounded on the five critical factors so that you make an informed decision to enable you to grow your wealth in 2024.  1. Returns: Fixed and Market-Linked Growth  In terms of returns, mutual funds offer market-related returns, which implies the value of investment can more than triple over long periods especially in equity mutual funds, which on average give around 8–12% annually. On the other hand, fixed deposits provide a fixed interest rate—at present around 6- 7% which does not change with the market conditions.    Example: Supposing you invested ₹ one lakh in a mutual fund which pays 10% each year, your money could reach up to ₹ one lakh sixty-one thousand in five years. But the same investment if kept in an FD with 6% rate will fetch approximately ₹1,34,000 in the same period.   2. Risk and Return: Fixed Income vs. Stocks Fixed deposits are beneficial because they give a guaranteed income. When you fix a rate, you get back the same return on the option at maturity regardless of fluctuations in the market. Any investors who are very cautious should consider investing in FDs because of this reason. When comparing Mutual Funds vs Fixed Deposits, mutual funds, especially equity funds, have more risk because their value is pegged on market prices. Although their returns are higher, they are associated with risks that are not stable in the market, thus the investors willing to take the risk should invest in these structures.  3. Liquidity In terms of liquidity, Mutual Funds vs Fixed Deposits shows mutual funds stand much higher than that of fixed deposits. Anytime you can encash your units without any charges except a few schemes such as ELSS which has a lock-in period of 3 years. RDs, on the other hand, reduce the effective rate by giving premature withdrawal penalty, which is not usually appreciated by dealers. If there is an issue with liquidity, then mutual funds is a better option.   4. Taxation Tax Efficient Gains over Taxable Interest One more difference between mutual funds and fixed deposits is taxation also. The interest accrued in the fixed deposits is further taxable depending on the tax bracket percentage which ranges between 10% and 30%. In contrast, mutual funds provide even higher tax benefits of returns on the money you invest with them. For instance, the LTCG on mutual fund investments in equities is charged at a flat rate of 10% for all gains higher than ₹ 1 lakh per year; further, most debt funds also benefit from the indexation on the LTCG for long term investments.   5. Investment Goal Alignment: Short-Term vs. Long-Term Mutual Funds vs Fixed Deposits shows that fixed deposits are ideal for most short-term financial targets because they promise pre-set and certain returns. For example, it is common to mention it in the event of an emergency or for saving for a certain project that is within a few years’ time frame given the stability of an indexed mutual fund.  Equity funds in particular are not ideal for short term goals such as holidays or emergencies, therefore they should not be used as an investment product when formulating goals like retirement, college funding or building wealth. Long-term investors benefit from compounding in addition to market gains.  Mutual Funds vs Fixed Deposits Comparison Table Factor Mutual Funds Fixed Deposits Returns Market-linked (8-12%) Fixed (6-7%) Risk Medium to High Low Liquidity High (No penalties on withdrawal) Low (Penalties on early withdrawal) Taxation Tax-efficient (10% LTCG) Interest taxed as per income slab Investment Goal Long-term growth Short-term or guaranteed returns Mutual Funds vs Fixed Deposits How To Choose The Right Investment? They may be used as a source of comparison when the investor is in between two choices of investing in mutual funds and fixed deposits. Finally, if you want an almost risk-free investment coupled with sure shot returns, then fixed deposits are your best bet. But if you don’t mind bearing market risks with an expectation of higher returns then long-term mutual funds will be more beneficial.   Conclusion   While there are times when the interest rates might be low in fixed deposits, you may end up being interested in mutual funds for the long run. Each choice has its positive side, yet it is significant to identify the major characteristics of Mutual Funds vs Fixed Deposits that will serve as a major key to the decision of which form of investment is the most suitable for the future. Do not let your money lie in the form of capital – seize the opportunity in this market to invest in mutual funds. Evaluating Mutual Funds vs Fixed Deposits can be the key to identifying which investment is better suited to your long-term financial goals.  Are you ready to make the right decision for your financial situation? Whether you are planning to put your money in fixed deposits to safely park the money or put it in mutual funds for making your money grow, it is always sensible to prepare. EduFund has the relevant tools and materials to compare Mutual Funds to Fixed Deposits, and to choose the right investment process for you.   Contact EduFund today and begin to map out financial progress for yourself! 

Fixed deposits are amongst India’s most loved investments. India currently has ₹103 trillion saved across 24.23 million deposits. A survey revealed that almost half of the 1.6 million investors chose FDs when they needed money within 3 years with safety.   Fixed deposits are widely loved by Indians because they offer a fixed rate of interest (higher than savings account interest rates), they are reliable, offer liquidity and allow investors to grow their wealth without added fear of risk. But there is a category within fixed deposits that Indians have not yet explored – Corporate Fixed Deposits. Let’s understand India’s best-kept investment secret with this blog!  What are Corporate Fixed Deposits?  Corporate fixed deposits, also known as company fixed deposits, are offered by financial institutions like Non-Banking Financial Corporations (NBFCs) and Housing Finance Companies (HFCs).  Shriram Finance, Bajaj FinServ, Mahindra Finance, LIC Housing Finance and PNB Housing Finance are some prominent companies that offer corporate fixed deposits to Indian investors. They are not issued by commercial banks. Here are some features of corporate fixed deposits:  Higher Returns: You can enjoy higher interest rates compared to bank FDs. Corporate FDs offer over 9% interest rates.  Flexible Interest Payouts: Earn interest at every interval. You can choose monthly, quarterly, annually, or at maturity as your payout option.  Principal and Interest Repayment: Get your principal and accumulated interest at maturity for maximum payout.  Maturity: Invest for a fixed period, ranging from a few months to several years.  Affordable Investment: The minimum investment amount starts at ₹1000 to ₹5000 for most institutions.  Special Offers: Senior citizens and women can earn special returns on these investments. They get an additional 0.25 to 0.50 depending on the institution.   Loan Collateral: Use your fixed deposit as security to access loans when in need and if your provider offers the facility.   Easy Liquidity: Corporate FDs do have a lock-in period, yet they are generally considered liquid investments. You can withdraw your money at any time.  Premature Withdrawal: Early withdrawal might incur a penalty for breaking the lock-in period.  Credit Rating: Corporate FDs rated by companies like CRISIL, ICRA and CARE. The ratings can help you determine a deposit’s quality, performance and financial health.  Corporate Fixed Deposits vs Bank Fixed Deposits   The main difference between corporate and bank fixed deposits are the interest rates, risk factor and provider. Here’s the difference between corporate fixed deposits and bank fixed deposits:  Feature Corporate FDs Bank FDs Issued Authority Non-Banking Financial Corporations and Housing Finance Companies Public and Private Banks  Interest Rates Higher Returns starting at 7-8% Limited Returns starting at 3-6% Risk Factor Moderate Low Tenure Flexible (12 months to 3 years) Flexible (7 days to 10 years) Minimum Deposit  ₹1000 -₹5000 (depending on the provider) Starts at ₹1000 Liquidity Can withdraw with penalties Can withdraw interest-free deposited amount Special Offers Senior citizens & women get addition interest rates for investing Senior citizens & women get addition interest rates for investing Eligibility  Indian investor above the 18 years of age Indian investor above the 18 years of age Safety  Not insured by any company Insured by DICGC up to Rs. 5 lakh per depositor per bank. Tax Liability  Tax Deducted at Source (TDS) at 10% if the interest income exceeds Rs. 40,000 in a financial year.  TDS is deducted irrespective of your income level for corporate FD holders.  Tax Deducted at Source (TDS) at 10% if the interest income exceeds Rs. 40,000 in a financial year.  There is an option to submit Form 15G or 15H to avoid TDS if your total income is below the taxable limit.  Benefits of Investing in Corporate Fixed Deposits Corporate fixed deposits are a valuable addition to your portfolio because of their ability to yield higher interest rates. These deposits offer an edge over bank fixed deposits and allow you to save bigger amounts in the short duration. This is an opportunity to diversify your portfolio and keep up with inflation in terms of long-term goals like your child’s education costs. The biggest benefit of investing in corporate fixed deposits is that the higher returns; you can get 7-8% interest rates on your deposited amount as compared to 3-6% with bank FDs. Let’s examine the benefits closely with this listicle:  Higher Returns: Corporate FDs offer higher interest rates than bank FDs and recurring deposits. These rates start at 7-8% depending on your provider.  Flexible Tenure: Investors can choose how long they wish to stay invested. The tenure is 12 months to 3 years.   Flexible Payout Options: You can choose to withdraw your interest at different intervals, that is, monthly, quarterly, half-yearly, yearly or at maturity.    Special Interest Rates for Women: Women depositors get an additional interest offers yearly for investing in corporate FDs.  Benefits for Senior Citizens: Senior citizens also get concessions for investing in corporate FDs.  Diversification: Corporate FDs help diversify your portfolio and reduce the risk of depending on a single asset class as an investor.  Easy to Invest: Corporate FDs can be opened from the comfort of your home. All you need is your PAN card to start your KYC and investment.  Liquidity: Corporate FDs have a lower lock-in period than Bank FDs and you can enjoy greater liquidity.   Moderate Risk: Corporate FDs offer manageable risks which are backed by reputed rating agencies.  Affordable: The greatest benefit of corporate fixed deposits is that it is open for millions of investors because of its affordability. Minimum investment amount for most corporate FDs is ₹5000.  Disadvantages of Investing in Corporate Fixed Deposits While corporate FDs are considered good investments, they are not devoid of disadvantages. Before you invest your hard-earned money, here are some disadvantages of investing in corporate fixed deposits:  Company Defaults: The biggest risk associated with corporate FDs is the fear of default. There is a chance that the issuing company may default on interest payments or fail to return the principal amount.   Creditworthiness: Every corporate FD is rated by rating agencies. Investors are urged to carefully assess the creditworthiness of the company by examining the credit ratings provided by credit rating agencies before investing.   Limit Liquidity: Corporate FDs have certain terms and conditions around withdrawal. There may be penalties for withdrawing before maturity which can limit your access to your funds.  Factors to Consider Before Investing in Corporate Fixed Deposits Here’s a checklist to help you choose the best corporate fixed deposit for your future financial goals:  Credit Rating of the Provider: The credit rating of an issuer is a crucial indicator of the corporate fixed deposit to repay its depositors. Corporate FDs are rated by CRISIL, ICRA, and CARE. A higher credit rating suggests a lower risk of default. Investing in companies with strong credit ratings minimizes the risk of losing your investment.     Interest Rates and Offers: An important factor behind choosing the right corporate fixed deposit is their interest rates and offers. You can compare the interest rates, find out if there are any special offers for existing clients, women or senior citizens and choose the investment with the highest yield.  Tenure and Payout Facility: Make sure that the tenure offered by corporate FDs align with your goal. Also consider the payout options offered by the facility so that you can withdraw your money without any hassle at the time of need.   Tax Implications: Corporate FDs are taxed in India. Tax Deducted at Source (TDS) at 10% if the interest income exceeds Rs. 40,000 in a financial year. TDS is deducted irrespective of your income level for corporate FD holders.  Minimum investment: Corporate FDs are an affordable and worthy investment for Indians. You can invest a minimum of ₹5000.  How to Invest in Corporate Fixed Deposits? If you are looking to invest in corporate fixed deposits, then all you need is the EduFund App to get started.   Download the App, set up your investment account and complete your KYC process in minutes.   Head over to the fixed deposit table under investments and choose the FD that aligns with your goal and needs.   Choose the investment account, tenure, payout option, select your bank and nominee details.   Read the terms and conditions before depositing your money.  Deposit the money and start your investment journey in under 10 mins!  With the EduFund app, you do not have to pay extra charges to invest in corporate fixed deposits. You can easily monitor your investment progress, withdraw at your convenience, and ensure your family's financial future is secure!  Download the EduFund app to start investing in your child’s future.

Have you heard, Indian parents are willing to risk 64 % of their retirement savings to fund their children’s education abroad? Though the increase in this statistic reflects a favorable trend, it also raises knowledge of safe and credible investment alternatives to support one's future. One such option is the Fixed Deposit (FD), which comes in different types of fixed deposits, is clearly defined, promises fixed returns, and has very low risk factors associated with it.   However, there is a small catch, not all types of fixed deposits are created equal. t’s important because the choice of one affects your financial growth in a big way. This blog will help you understand the 6 types of fixed deposits and the right choices to make for high returns.  What is a Fixed Deposit? Fixed Deposit, also referred to as a term deposit, is a product wherein one invests a certain amount of money for a certain period in exchange for certain percentage interest rate. Essential characteristics of an FD are the promised return on investment which is why they are preferred by the cautious clients.  Advantages  Fixed Deposits Investment as an avenue for generating some income has the following advantages. Guaranteed Returns: Unlike stocks or mutual funds investment or any other form of investment, Fixed Deposits secure definitely an assured return that does not get affected by the market phenomena.   Capital Preservation: The principal amount is fully secure; therefore, it will suit the risks-averse investor perfectly.  Low Risk: FDs are with low risk profile which ensures investors to park their funds during stock market fluctuations.  2. Types of Fixed Deposits It is vital to consider the various types of fixed deposits to be in a position of choosing the right instrument to suit its objective. Now, let’s discuss the 6 various types of Fixed Deposits that exist for Indians. 2.1 Cumulative Fixed Deposit   Cumulative fixed deposits reinvest interest gained, taking advantage of compound interest. This strategy can considerably increase returns over time since the interest earned is added to the principle, which yields more interest.  Such types of Fixed Deposits are suitable for those investors who wish to accumulate money over a long period of time because the interest is compounded and results in massive returns.  Interest Payment: Compounded and paid at maturity.  Best For: Long-term savers looking for wealth accumulation.  2.2 Non-Cumulative Fixed Deposit   The FD scheme provides attractive interest rates for both, cumulative and non cumulative fixed deposit customers. The Non-Cumulative Fixed Deposit pays the interest amount back at prior time periods which can be monthly, half-yearly or yearly. This is one of the popular types of fixed deposits for any person especially in his or her dusk years, that is a retiree who wants a fixed ensure from his or her investment.   Interest Payment: To be disbursed on standard periods.   Best For: Low active investors or those who require for periodic use.   2.3 Flexi Fixed Deposit   A Flexi Fixed Deposit actually takes a little from both the savings account and the fixed deposit. They also have a ‘sweep-in’ facility under which any amount available in your savings account is automatically credits to the FD to fetch better interest rates. This gives cash availability while at the same time guaranteeing that your surplus cash does not stay unutilized.  Interest Payment: Depends on how much has been swept into the FD.   Best For: Investors seeking a combination of flexibility and higher returns, as distinct from stakeholders that seek capital appreciation.   2.4 Standard Fixed Deposit   Standard Fixed Deposit is one of the simplest types of Fixed Deposits where a fixed interest rate is provided for the selected fixed term. They are popular because they are easy to understand and not prone to failure, and therefore, best suitable for newcomers to investing.   Interest Payment: Fixed rate for a set period.   Best For: Banking and non-banking financial institutions requirements seeking safer security investment alternatives.   2.5 Tax-Saving Fixed Deposit   The concept of Tax Saving Fixed Deposit is a perfect meal for those who are much worried about saving tax under Section 80C of income tax regulation. It has a minimum maturity period of five years, and those planning on investing for a limited period, it is preferable since it will help in minimizing taxes as earnings a steady income.   Interest Payment: Cumulative, fixed for a period of 5 years, compounded annually.  Best For: Those in search of saving on taxes.   2.6 Fixed deposit for senior citizen  Especially for customers who are 60 years and above, the Senior Citizen Fixed Deposit has higher interest rates than most ordinary FD prices. This makes it favorable for risk-diversifying retirement income since it guarantees both safety and reasonable income return for the elderly.  Interest Payment: Higher than regular FDs.  Best For: Senior citizens looking for stable income with better returns.  2.7 Corporate Fixed Deposit   Corporate FD is available with the companies and Non-Banking Financial Companies instead of bank. While these FDs may earn one more returns than the others, they possess an extra degree of risk. It must be checked how credible the issuing company is before investing because your investment’s safety depends on that company’s credibility.   Interest Payment: Generally, prime rates are usually higher than bank fixed deposit rates.   Best For: High return chasers who are willing to take more risk in their investment.   3. How To Go About Selecting The Right Fixed Deposit The complexity of a fixed deposit relies on factors such as maturity, flexibility, and the risks you are ready to take. Here are some points to consider:   Investment Goals: Long term or short term do you plan to use the money? A Cumulative FD can be suitable if you’re saving for a long-term goal, in contrast, a Non-Cumulative FD may be most appropriate if you require immediate sources of regular income.   Need for Liquidity: If you require regular to your money, a Flexi FD will provide exactly what you need – the ease of a savings account with more benefits and an even better return. Risk   Risk Tolerance: Most FDs are relatively safer; however, a Corporate FD may be more rewarding but charged with risk.  4. How To Open A Fixed Deposit Account Fixed Deposit account can be opened in a very easy way. Here’s a step-by-step guide:   Select a Bank or Financial Institution: Compare interest rates as well as FD options offered by the banks and NBFC’s.  Choose Your FD Type: Depending on your monetary needs, choice of fixed deposit instrument for investment and liquidity considerate, choose the most appropriate type of fixed deposit.   Submit Required Documentation: Any bank would generally call for identity proof, proof of the address of residence, and a PAN card.   Deposit the Amount: After documentation confirmation, you need to add funds and your FD will be activated and ready to be used. Some of them also provide this account opening online by using the bank’s mobile application as well as the bank’s website. Conclusion  Fixed Deposits are one of the most effective ways of protecting your money and the good thing is that you get assured return. There are many types of Fixed Deposits, including Cumulative FDs, Non-Cumulative FDs, Flexi FDs, and Tax Saving FDs, and it is prudent to choose one based on one's investment risk, goals, and perseverance.  For instance, if you are planning for retirement, banking on regular income, under tax savings drive, or just seeking to build wealth over time; there is a fixed deposit to suit your needs. In defining your financial growth path, it is important to comprehend these 6 powerful types of fixed deposits. Fixed Deposits are a great way to safeguard your financial future. EduFund helps its customers make better financial selections that will help them achieve their goals. Contact EduFund now to learn more about Fixed Deposits and allow us to assist you in selecting the best FD investment for maximum revenue success and financial stability. 

Did you know that more than 95% of Indian families prefer Fixed Deposits (FDs) as a secure investment option? If you are unsure of where to invest and want to keep your money safe while getting a regular passive income, then knowing the structure of monthly interest for ₹1 lakh fixed deposit is very important. FDs are the most preferred amongst the population of the Indian households due to safety and return on maturity which is pre-defined.   In this blog, we will show you how to calculate monthly interest for ₹1 lakh fixed deposit and discuss the advantages of various types of Fixed Deposits.  Interest Payout Options for Fixed Deposits When considering the monthly interest for ₹1 lakh fixed deposit, it's essential to know the two primary types of FDs:  Cumulative Fixed Deposits  On cumulative fixed deposits, the interest earned is taken and added to the initial deposit principal and paid at the end of the maturity period. This makes your earnings to be paid in a way that they are compounded where, your interest earned is taken back to your initial sum and then used to calculate future interest. This type is best suitable for wholesale investors who do not need their money in the short term and who seek high yields at the end of its term.  Non-Cumulative Fixed Deposits  Non-cumulative fixed deposits, meanwhile, pay out interest monthly, quarterly or annually. And if you require a steady supply of income, this avenue can be especially advantageous. Cumulative FDs are more suited for those looking to create a corpus. Non-cumulative FDs suit them who need regular income, such as retirees.  Significance of Monthly Interest Pay-outs Opting for monthly interest for ₹1 lakh fixed deposit can yield several benefits.  Steady Cash Flow- The regular income helps in keeping monthly expenses at bay as you can get a monthly interest payout. This can be good for retirees, or anyone on a fixed income to have monthly interest for ₹1 lakh fixed deposit for financial stability.  Financial Flexibility- The requirement of a more constant flow of cash is beneficial for all-purpose expenditure control. You can use it to pay for recurring expenses such as water bills, rents, or hospital bills.  Consideration of the proposed model for yearly distributions  Though the annual pay-outs look decent, you have to stick with your money until the end of the year before you can touch it. How much practical use are monthly payouts for most investors? They are a form of security with the capacity to broaden or narrow the number of payouts in accordance with the investor’s needs; thus, incorporating the feature of providing funds when required in their structure.  How to Calculate Monthly Interest for ₹1 Lakh Fixed Deposit To determine the monthly interest you can expect from a ₹1 lakh fixed deposit, you can use simple formulas for both simple and compound interest.   Basic Formulas:  Simple Interest (SI):  SI=P×r×t/100 =   Where:   P = ₹1,00,000 (Principal amount)  r = Annual interest rate  t = Time in years  Compound Interest (CI):  A=P(1+rn)nt  Where:  A = Maturity amount  P = ₹1,00,000  r = Annual interest rate  n = Number of compounding periods per year  t= Time in years  Understanding the Calculations: Let’s try and understand with an example using an interest rate of 6% to illustrate how to calculate the monthly interest.  For Simple Interest:  If you invest ₹1 lakh at an interest rate of 6% for one year, your monthly interest for ₹1 lakh fixed deposit would be 500 using Simple Interest.   The annual interest would be ₹6,000.  For Compound Interest:  If you invest ₹1 lakh at an interest rate of 6% compounded monthly, the total maturity amount after one year will be slightly higher due to compounding.  After using the formula, you would find that the monthly interest is approximately ₹513.98. Using Our FD Calculator to Estimate Monthly Interest At EduFund, we offer an FD calculator that simplifies this process. With just a few inputs—your deposit amount, interest rate, and tenure—you can get an accurate estimate of your monthly interest.  Benefits of Using Our FD Calculator: Quick and Accurate: This service delivers accurate results in terms of seconds within zero human interference.   Comparative Analysis: Subscribe and easily compare how different interest rates can affect your monthly payouts.   To make a wise decision regarding which fixed deposit plan is closest to your requirements you need to understand these calculations and apply FD calculator.   Factors Affecting Monthly Interest Rates: Several factors determine the monthly interest for ₹1 lakh fixed deposit:   Bank Policies: The interest rates on loans can vary from one bank to another due to established regulations and competition. This means that one should compare our rates of the various banks to select the best sector that will suit him/her.   Tenure Amount: Fixed deposits as a type of investment are typically reliant on the amount to be invested and the duration for which it will be invested; this is because the length of the fixed deposit and the amount of money deposited substantially determine the interest rates to be given. Usually, duration of the account and the amount of deposit determines the interest rate that a particular account will first be charged or offered.  Market Conditions Economic factors, such as inflation and changes in monetary policy, can also impact the interest rates offered by banks. Keeping an eye on these factors can help you make informed investment decisions. Real-Life Scenarios Understanding how monthly interest for ₹1 lakh fixed deposit can impact personal finances is crucial:   Scenario 1: Retirement Planning An individual who invested in a non-cumulative FD with monthly payout of ₹500 can manage daily expenses from this income without touching the principle, which gives a retiree financial security.   Scenario 2: Emergency Fund An individual saving for emergencies would go for monthly interest payouts for example in case of an emergency one will not need to break the FD and thus have access to that money.   Conclusion  Understanding the monthly interest for ₹1 lakh fixed deposit is important for effective financial planning. By calculating your potential earnings and exploring various Fixed Deposit options, you can ensure a steady income stream that aligns with your financial goals.   Take advantage of our FD calculator at EduFund to make informed decisions about your fixed deposit investments today! With the right information and tools, you can maximize your returns and achieve financial security.