Why a Fixed Deposit is the Perfect Avenue to Park Funds for an Emergency?

Monday, May 15, 2017, AM | Leave Comment

We’ve all had that element of surprise when we thought that the future was too distant until our circumstances bridged that gap sooner than we had expected.

In the matter of finances, we often wrongly assume that we’ve planned for every emergency.

However, in times of need an FD can help in a way few investments can.

Here’s how.

Fixed deposits

  • Savings Alone Won’t Save you

    As inflation teaches us, saving alone isn’t enough since what is in the safe or a savings account hardly grows in value.

    When adjusted for rising expenses, savings won’t help as much as investing an FD with good returns does.

  • Hold Steady, Get that FD

    If you were to fill a three-litre tank while a mischievous child emptied it of 1 litre every 10 minutes, there is no way you would store it to its capacity.

    An analogous process happens in savings. We are spenders who cannot help but tap into our savings accounts for frivolous expenditure.

    Since you cannot benefit if you don’t let your savings be in your FD account for the chosen tenure, your money is stored safety while garnering good returns.

  • Fixed Deposits Benefits

    A fixed deposit rewards you for your patience. It does that by offering the investor a higher interest rate than a savings account.

    So the more you are willing to wait it out, the greater the reward.

    An FD thus disciplines the spendthrift in you by penalties or fines; after all the stability of your investment is key.

    An FD also has the added advantage of compounding whatever you accumulate or store.

    The defining characteristic in a Fixed Deposit is the word ‘fixed’, which refers to your money remaining fixed or intact up until the maturity of your FD, which is the amount of time required to stay invested to reap the benefits offered.

  • No Risk, Good Return

    A fixed deposit is one of the safest ways of investing your hard-earned savings, thus giving you good returns without the necessity of taking any risks.

    What you get is appreciation of your capital—the money invested. This appreciation is possible because your FD is one of those financial instruments where you get an assured return and faces no erosion from such events as volatility in stock markets, changing economic scenarios and other factors.

  • Meeting Contingencies

    The absence of any erosion threat makes a fixed deposit a good bet to park money needed for exigencies.

    Everyone of us has faced a contingency sometime or the other only to find that we never have sufficient funds.

    A good rule of thumb to avoid this despair, which sooner or later strikes everyone, is to set aside six months of your surplus money and park it in an instrument which gives you interest several notches more than your savings account.

    And that is an FD. In times of emergency you have the option to break your fixed deposit before maturity.

While you are on the lookout for a safe and reliable fixed deposit investment that also offers better returns than bank FDs, do see the interest rates and high stability ratings of FDs.

With an easy online application, you can create your FD account with little hassle and be on your way to save for a rainy day.

Calculate your returns using this FD calculator and find out more about competitive interest rates on FDs.

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