Interest rates are the subject of speculation for all investors and investment advisors. To their anguish, the deposit rates have been falling recently. New rates after a fall of 0.20 – 0.25% have come into play with some banks even cutting rates by 0.75%. This is a difficult time for investments in fixed deposits. With uncertainty in various macroeconomic factors, one should be prepared for further fall in interest rates. So how can you get higher interest on fixed deposits – which have been the traditional option for parking money? Here are a few tips to ensure you do not lose out on higher returns from your FD investments.
- Look out for changes in Reserve Bank of India’s Rates – Keep a lookout for announcements of cuts in policy rates by the central bank. If the news is that it foresees a need to cut rates to increase loans, then go ahead and lock in existing fixed deposits.
- Look for safe but higher-paying alternatives – Company fixed deposits are a relatively unexplored option to ensure your money is invested in an option as safe as a bank fixed deposit. The company fixed deposits are rated by credit rating agencies like ICRA and CRISIL. Bajaj Finance FD is one of the highest-rated company fixed deposits which is accredited with FAAA/Stable rating by CRISIL and MAAA/Stable rating by ICRA. It is also offering a higher FD interest rate than a bank fixed deposit.
Ensure you go for a trustworthy company like Bajaj Finance which already has a total deposit book of Rs 16,000+ crores with a customer base of 2,50,000.
- Split your investment into multiple deposits – You can split your investment into different FDs with varying tenors to benefit from interest rate fluctuations. Bajaj Finance FD offers a multi deposit facility to help you easily invest in multiple FDs. Also, split your FDs across different banks and branches to ensure that your deposits can earn the maximum available interest rates. All banks do not drop rates at the same time. You can check with various banks and lock in where deposits have not dropped yet. This way you can still catch a good interest rate.
- Reinvest interest – If you have chosen a periodic payout for your FD, save it and invest it in another FD or a market-linked instrument. This might seem “too little to invest” but over a period of say three to five years, you can easily build a sustainable corpus where the principal of the second investment comes from the output of the first one.
If you choose a cumulative FD, the interest amount will automatically get multiplied due to compounding. Thus, enabling you to earn higher returns on your investment.
Company fixed deposits like Bajaj Finance FD have various additional features that will ease your investment plan and provide benefits like loan against Fixed Deposit up to Rs 4 lakhs. It will also help you auto-renew your fixed deposit and leave you unburdened with the issue of remembering. The high fixed deposit interest rates are available as per investor type. If you are a senior citizen, you can easily avail an additional 0.35% interest along with 51.75% return on investment. If you are a returning customer, you can avail an additional interest rate of 0.10%. All this can be done with a minimum investment of Rs 25,000.