Overview
Fixed deposit (FD), also known as a term deposit or time deposit, is a safe investment option offered by banks and other financial institutions. It allows you to deposit a lump sum of money at a fixed interest rate for a predetermined amount of time and earn assured returns. You are not permitted to withdraw money during this period without paying a penalty. Generally, FDs have higher interest rates than standard saving accounts. People seeking a guaranteed return on their investment with minimal risk often opt for fixed deposits.
The FD interest rates for the general public range from 3.00% p.a. to 9.50% for tenures from 7 days up to 10 years. Senior citizens are offered interest rates higher by 0.50% to 0.75% of the rates offered to the general public.
Kisan Vikas Patra (KVP) 2024
Kisan Vikas Patra scheme is one of those saving avenues that help individuals accumulate wealth over time without harbouring a fear of any associated risk. Currently, it is one of the most popular savings schemes launched by the government of India that operates to mobilise savings and inculcate a healthy investment habit among individuals.
To invest in the Indira Vikas Patra or Kisan Vikas Patra scheme, individuals are required to learn as much as possible about the said scheme and become familiar with its functioning to make the most out of it.
Recurring Deposit RD
Among the low-risk investment tools with moderate and assured returns, Recurring Deposit (RD) is a popular investment option in India. It comes with an option of flexibility for customers in the choice of investment amount and tenure accompanied by multiple other benefits.
Available in flexible tenure options ranging from 6 months to 10 years, this investment tool offered by multiple banks and NBFCs helps channelize monthly savings for long or short-term corpus creation.
Investors can thus choose a minimum amount to be invested every month over the term for assured wealth generation.
If you do not have a lump sum amount to meet short-term goals, depositing a small share of your income to the RD account every month serves the purpose well.
Endowment Plan EP
An endowment plan is a type of life insurance policy that combines elements of savings and protection. It offers a dual benefit by providing a predetermined sum assured in case of the policyholder's unfortunate demise during the policy term, and a maturity benefit if the policyholder survives till the end of the policy term.
With an endowment policy, the policyholder pays regular premiums over a predetermined period, usually 10, 15, 20, or 25 years. The premiums paid by the policyholder are divided into two parts: a portion is used to provide life insurance coverage, and the remaining portion is invested by the insurance company.
Endowment policies are valuable for financial security, supporting both short and long-term goals, while providing for families.
Money back Plans
A money back policy is an investment plan offered by an insurance company that pays a pre-determined percentage of the sum assured to the policyholder at specific intervals called "survival benefits." These survival benefits are paid out irrespective of whether the insured individual is alive or not.
It offers the policyholder the dual benefit of life coverage and regular cash inflows that can be utilized for various purposes such as education, marriage, purchasing a house, or meeting other financial goals.
FAQs
A fixed deposit is a savings option that helps you earn interest on saving parked with a financier of your choice. You can choose to get return periodically or at maturity. The interest rates are typically higher than savings accounts because the money is locked in for a specific period and cannot be withdrawn at the will of the depositor, except in specific scenarios in which the Customer is ready to bear the penalty for premature withdrawal.
FD schemes typically have a duration of seven days to 10 years. However, HFCs provide tenures ranging from 12 months to 120 months, while NBFCs offer investments for periods spanning 12 months to 60 months.
To obtain a duplicate KVP certificate, write to the Post Office of KVP issue and include the identity slip that was provided at the time of issue. The identity slip will prove that you own KVPs. If you have misplaced or lost your identity slip, please contact the Post Office where it was issued for further information.
Cooperative Societies and Cooperative Banks are not permitted to invest in Kisan Vikas Patra (KVP).
Yes, you can cancel your Recurring Deposit before the term expires. Banks, on the other hand, often do not allow partial withdrawals.
Yes, tax can be saved on recurring deposits if the money is deposited in the recurring deposit account for a medium-term or long-term period of time.
The main difference between an endowment plan and term insurance plan is as follows- In case of term insurance plans, a lump sum is paid to the beneficiary if the Life insured dies within the maturity period. If the death of the insured does not occur within the maturity period, no sum is payable by the Insurance Company. Whereas in case of endowment plans, if the insurer dies before the maturity date, the nominee will get lump sum assured by the insurance company. But if the life insured survives till the policy maturity period, he will be paid the sump assured along with the accrued bonus (if any).
The lump sum of money assured by the insurer will be given to the insured if he survives until the policy matures. If the insured dies early, that is before the policy maturity period, his beneficiaries will get the lump sum payment assured by the insurer. What is not guaranteed in the policy is the bonus. Whether you will receive a bonus or not depends on the number of years the policy was in force.
TMoney back insurance policy is suitable for individuals who want a regular guaranteed$ income stream along with an insurance coverage`. A money back policy can be beneficial if you have long-term financial goals or require a steady income for your future expenses.
A money back policy offers many tax~ benefits. The premiums paid towards the plan qualifies for a deduction of up to ₹ 1.5 lakh under Section 80C. In addition to this, the returns from a money back policy are exempt subject to conditions prescribed under Section 10(10D)~ of The Income Tax Act, 1961.