Fixed Deposit returns

Posted by Felix Okoli on Tuesday February 5, 2013 at 10:40:58:

Fixed deposit is the money kept in a bank for a period of time. The money cannot be withdrawn until the speculated time is complete At the end of a term, the money is either withdrawn or reinvested for another period or term. An account holder who decides to place his or her money in a fixed deposit, it is usually accompanied with a fixed interest rate as per terms and conditions of the account. Such interest is usually higher than that of the normal savings account and is determined by the tenure of deposit. Of course one should not expect the interest on a fixed deposit of one year and another of five years duration to be the same. Take note that deposits offered by companies are not as safe as that of the banks and so it is better to make your investments through the banks.

Fixed deposit has minimum period of 15 days, with the maximum period of 5 years or more. There are certain offers like payment of interest to the account holder on monthly or quarterly basis. This option has a lot of benefit to those already retired from their job. Another benefit is that one can obtain loan against a fixed deposit .However, one should take note that should in case inflation rate goes higher than the interest rate, it will result to earning negative returns.

If you decide to reinvest interest earned yearly, or at the end of the stipulated time, together with the active deposit, then one can be earning compound interest, thus the effective returns higher than the rate of interest. On the other hand, if you choose to withdraw your money before the expiration of the time stated , a penalty in form of lesser interest rate will be the case on your deposit .At this point, I will advise that it it is better to wait.

Fixed deposit is beneficial in many ways, as it helps in achieving a balanced financial portfolio. It can serve as collateral in obtaining loan from the financial institution.

I wish you a healthy financial future with fixed deposit returns.