The global pandemic of Covid-10 has compelled individuals as well as businessmen from all over the world to reconsider their financial plan, restructure investments, savings and enable them to find new ways to diversify their portfolio risks. There is no doubt that the process of building an effective and result-oriented financial plan starts with the proper understanding of financial instruments. But FD i.e Fixed Deposits have always been one of the most frequently used, safest, and smartest finance choices among corporate businesses and also individuals that deserve to be in their investment portfolio.

The foremost reason for considering FD as an investment option is its assured guarantee of getting returns. Although the falling interest rates on FDs and day-to-day curiosity towards other investment instruments like equities, most of the investors are shifting their investing preferences to market-linked products including mutual funds, etc. It can be a great move but this does not alleviate the importance of FD.

FDs can be a good addition to your investment portfolio and if you have doubts about it, this blog/guide can help you. Let’s have a look:

Reasons To Include FDs In Your Investment Portfolio

They Reduce Portfolio Risks - There is no doubt that Fixed Deposits are one of the safest investment options compared to other instruments like stocks etc. With less vulnerable interest rates and guaranteed returns after the maturity period ends, the collection of funds that you put in your FD acts as a great way to secure your capital through asset allocation. Unlike mutual funds that provide growth scope to your money over the long term, FDs provide stability to your portfolio.
They Are Secure - In addition to providing low risks and guaranteed returns, they also ensure the safety of deposited funds based on the ratings provided by CRISIL. The highest security level is FAAA which demonstrates the highest rating for the financial instruments including the sound finance stage through payment of interests and principal.
Fulfill Short-term Finance Needs - Fixed deposits are undoubtedly the best investment options for individuals having short-term financial goals and require a certain amount within a prescribed period. Individuals who are not willing to lock their capital for a long period and need flexible finance assistance can surely go for fixed deposits. They provide guaranteed results upon their maturity. This way, you can fulfill your financial goals efficiently.
Select Between Cumulative And Non-cumulative - Depositing your amount in an FD allows you to choose an option between cumulative and non-cumulative interest rates. It means you can decide the time in case you want to get the interest gains. For example, if you are willing to get income through interest for paying your bills and EMIs, you can go for quarterly and monthly pay-outs or non-cumulative FDs. On the other hand, if you want to keep your savings in a locking period until the period of FD ends, you can opt for the cumulative term.
Sured Returns About Maturity -At the time of depositing your money into a fixed deposit, you are already aware of the maturity period and amount that you will get after the tenure ends. Regardless of the performance of the economy and a decrease in the rate of interest, you will surely get the returns as per the interest rate that you agreed on at the time of depositing FD.
Withdrawal Flexibility - This is another benefit of depositing money in a fixed deposit is that it allows you to withdraw your money before the tenure ends when you have an emergency to get funds. Though you may require to pay a certain penalty, the withdrawal before maturity can be done simply. It helps you avoid any financial crisis in the future.
Easy Loan Is Added Benefit - Another added benefit of including FD in your investment portfolio is that you can apply for a loan against them and get it easily in case you require funds. For example, some FDs come with loan facilities to provide you easier access to funds in emergencies.

Final Words

Now you know that depositing your money into FD and including it in your investment portfolio has many benefits without any finance threats in the future. If you are looking for security, assured returns, and added benefits, this is the perfect investment plan for you.

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