Fixed deposits are one of the most secure investment options that safeguard your money and allow it to grow over time to contribute to your corpus of wealth. However, when you park a decent sum on a FD then you will have to keep it untouched for a fixed tenor, through which the invested amount matures on a fixed rate of interest.
During this time, you may have funds needs owing to a range of purposes like funding your healthcare costs, retirement expenses or even your child’s education costs. However, breaking your FDs prematurely will cause you to lose out on valuable interest. Alternatively, through a little planning, you can access funds from your FD without breaking it and allow your investment to grow over time.
Here are a few ways in which you can access your FDs without losing out on interest earnings.
Choose non-cumulative FDs.
When you feel a recurring need for funds and meeting these needs from your monthly income is not viable, you can choose to invest in non-cumulative FDs. They allow you to receive the interest payouts on your FD investment on a regular basis, and you can use this to finance your monetary needs.
Say you have chosen a non-cumulative FD for 5 years, and don’t require periodic interest after 3 years, simply save the interest earnings to create a separate emergency fund. Conversely, you can convert your non-cumulative FD to a cumulative FD. So, in either case, choosing this FD variant is useful.
For best results, make sure that you select the schemes that offer high interest and good cumulative frequency. This will allow you a chance to get better returns on your invested sum. You can choose Bajaj Finance Fixed Deposits to get the flexibility of choosing the frequency from a range that includes monthly, yearly, half-yearly, and quarterly payouts. Also, you can choose a tenor that suits you and ranges between 12 to 60 months. Moreover, with Bajaj Finance you can get a high interest of up to 8.20% on your investment.
Take a loan against your FD.
A sudden hospitalisation of your spouse, emergency repairs at home, urgent car engine replacement, and business working capital needs are all unannounced emergencies which you need to attend to immediately. Faced with such situations, you will need cash at once. Instead of liquidating your FD and losing out on interest as well as paying a premature withdrawal penalty, you can pledge the same to avail a loan.
All you need to do instead is use the FD as collateral, which allows you to safeguard until maturity so you get the full interest payout due to you, while also helping you in securing funds to finance your short-term emergencies. With FD as collateral, you can get access to a high loan amount to the value of 60% of your FD investment at a nominal interest.
Have multiple FDs and benefit from laddering.
Rather than pooling all your savings into one FD, investing different amounts in multiple FDs of varied tenors will help you create a financial back-up. This way, you will be able to get funds at maturity at different intervals to cater to your needs. For example, you can dedicate 50% of your savings in a 5-year tax-saving FD and the rest into two of three FDs of shorter tenors that mature at different times during a year.
These smaller FDs will help you fulfil plans like pay for a vacation or buy home appliances in the short term while the longer tenor FD can help you pay for the down payment of the home you plan to buy in 5 years. So, invest in a mix of FDs by depositing funds from your income, bonuses, and interests from other investments then use the maturity amount for a gamut of long- and short-term needs.
Observe these practices to reap maximum return on your invested sum in FDs without losing out on interest earnings. Plan and invest in varied FDs or choose FD variants based on purpose. Use an Interest Calculator to make more informed decision.
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