Fixed Deposit
Posted By Jennie Mcculloch Posted On

How to Maximise Your Earnings from a Fixed Deposit

Fixed deposits are one of the most popular investment options for people looking to earn a steady and secure income. There are offer a guaranteed rate of return and are considered low-risk investments. However, many people don’t know how to maximize their earnings from a fixed deposit. The step in maximizing your earnings from a fixed deposit is to choose the right one. Different banks and financial institutions offer different interest rates, so it’s essential to shop around and compare rates. Consider the maturity period and the penalty for premature withdrawal as this impact your returns.

Consider investing in a tax-saving fixed deposit, which allows you to claim a deduction under Section 80C of the Income Tax Act, up to Rs. 1.5 lakh. When you invest in a best fixed deposit rates singapore, you choose to receive the interest payout at regular intervals or opt for cumulative interest. In the former case, you receive the interest at predetermined intervals while in the latter; the interest is compounded and paid out at maturity.

best fixed deposit rates singapore

The cumulative interest you earn higher returns as the interest is calculated on the principal amount plus the accumulated interest.  Interest rates offered on fixed deposits are subject to change based on the economic conditions and the policies of the Reserve Bank of India (RBI). Essential to keep an eye on the interest rate cycle and invest when the rates are high.

  1. If you invest in a fixed deposit during a high-interest rate cycle earn higher returns. Moreover, also opt for a long-term fixed deposit as the interest rate remains fixed throughout the tenure, even if the rates fall. If you have a lump sum amount to invest, consider investing in a Systematic Deposit Plan (SDP). The investment option allows you to invest in fixed deposits in a staggered manner you choose the investment amount and tenure, and the bank will automatically renew the deposit on maturity.
  2. Investing in an SDP You average out the interest rates and reduce the impact of interest rate fluctuations. Moreover, it also allows you to benefit from compounding interest, resulting in higher returns. Many banks offer special fixed deposit schemes for senior citizens, which offer higher interest rates than regular fixed deposits you are a senior citizen, consider investing in these schemes to earn higher returns.

Moreover, senior citizens are also eligible for a higher tax deduction under Section 80TTB of the Income Tax Act, which allows them to claim a deduction of up to Rs. 50,000 on interest earned from bank deposits.Investing in a fixed deposit is a low-risk and secures investment option that earns a steady income. However, it’s essential to choose the right fixed deposit and opt for the right interest payout option to maximize your earnings. Moreover, keeping an eye on the interest rate cycle, investing in a systematic deposit plan, and considering senior citizen fixed deposit schemes.