India has witnessed inflation growth, and the current inflation rate of India happens to be 6.44 percentage.
To hedge against inflation, many investors prefer to park their funds in schemes such as fixed deposits to ensure generous returnsagainst minimum risk. Furthermore, with the right strategies, investors can also increase their earnings from this scheme.
ADVERTISEMENT
FD as a smart investment optionagainst inflation
Investing in the right schemes is essential to ensure stable returns even during inflation. For this reason, investors prefer parking their money in fixed deposit schemes. There are various ways in which FD investments can hedge against inflation. These are as follows:
1. FDs offer fixed interest rates
The FD rates remain constant throughout the tenure of investment. Thus, during inflation, investors can expect steady returns from the money that they have deposited in this scheme. This can serve as an extra income to meet lifestyle expenses during inflation.
2. FDs dilute the risks associated
High-return investment schemes such as stocks are extremely volatile. This is mainly due to fluctuations in market conditions. However, with investment in FDs, investors can expect stable returns and lower risks as they are independent of the unprecedented market movements.
3. Fixed deposits can be used to obtain credit during emergencies
Urgent monetary requirements can arise anytime during inflation. Under such circumstances, investors get the opportunity to raise a loan of up to 75% against their cumulative FD investments. However, in case of non-cumulative investments, they are eligible for a credit of up to 60% of the deposited amount.
4. FDs come with flexible payout options
Investors have the flexibility of deciding the payout mode at their convenience. This is beneficial as they can customise the payout to monthly options to ensure a regular inflow of cash. This can help them deal with costs during inflation.
Smart strategies to maximise returns from FD investments
Individuals depositing their money in FDs can employ several strategies to increase their returns from investments. These include:
1. Choosing a specific tenure of investment:Renowned financial institutions such asBajaj Finance offers high Fixed Deposit interest rates for selecting specialised tenures like 15, 18, 22, 30, 33, and 44 months. Hence, investors can select these tenures instead of the normal ones to maximise returns from FDs. For instance, the interest rate for a tenure of14 months is 7.40% (for customers below 60 years) and 7.65% p.a. (for senior citizens), whereas for 44 months it is 7.95% p.a. (for customers below 60 years) and 8.20% p.a. (for senior citizens)
2. Opting for longer tenures: Selecting longer investment tenure leads to an increase in the FD rates on the investments. Thus, investors can go for long-term investments for higher returns. For example, the interest rate offered by Bajaj Finance on FDs for 22 months is 7.50% whereas that for 33 months is 7.75%
3. Going for cumulative FDs: Cumulative FD options provide higher returns compared to non-cumulative ones. Furthermore, individuals opting for a loan against their FDs can also receive a higher amount as credit in case of cumulative FDs. Investors can use an online Fixed Deposit interest calculator to calculate their return from both before investing.
The following table illustrates how for customers below 60 years the optimisation of the above factors help in increasing returns from a fixed deposit investment. (w.e.f 4 March, 2023)
|
Tenure of FD in months |
Cumulative payout (post-maturity withdrawal) |
Non-cumulative payout |
|||
|
Monthly |
Quarterly |
Half-yearly |
Annual |
||
|
14 |
7.40% |
7.16% |
7.20% |
7.27% |
7.40% |
|
22* |
7.50% |
7.25% |
7.30% |
7.36% |
7.50% |
|
28 |
7.35% |
7.11% |
7.16% |
7.22% |
7.35% |
|
44* |
7.95% |
7.67% |
7.72% |
7.80% |
7.95% |
Senior citizens get additional rate benefit of up to 0.25% p.a.
Investing in fixed deposit schemes online
Nowadays, financial institutions including Bajaj Finance allow individuals to invest in FDsthrough a complete online application process.
However, potential investors should note that only citizens of India, HUFs, sole proprietorships, partnership firms, can invest in FDs in India.With most financial institutions offering online FDs,one can fill up the online application form on the respective websites.
Some other investment options to fight against inflation
Apart from FDs, investments in gold and real estate can also act as a hedge against inflation. However, a high amount is necessary to begin investment journey in these schemes. On the contrary, investors have the flexibility of depositing as less as Rs.15,000 to book an FD with Bajaj Finance.
Considering the perks and investment amount, depositing money in a fixed deposit scheme can prove to be a smart strategy to fight inflation. Furthermore, investing money with top-rated financial institutions such as Bajaj Finance can ensure maximum security of the funds depositedalong with attractive returns.
Subscribe today by clicking the link and stay updated with the latest news!" Click here!
