Fixed deposits (FDs) are a low-risk form of investment that promise attractive interests and assured returns to investors. The rates of interest for senior citizens are higher in an FD, making it the choicest investment for those in the golden years of their life. Investing in FDs is also a good method of portfolio diversification for those looking to save their investments from volatility.
FDs are offered by big banks, small finance banks, non-banking finance companies (NBFCs) and the post office. The rates of interest vary across these institutions and are updated frequently. Here’s a look at the best type of FDs in which to invest in 2021:
|Bank||Interest rate||Senior citizen interest rate|
|Jana Small Finance Bank||6.50%||7.00%|
|Equitas Small Finance Bank||6.30%||6.80%|
|Ujjivan Small Finance Bank||6.05%||6.55%|
|Union Bank of India||5.50%||6.00%|
The interests earned on FDs also depends on the types of fixed deposit available to investors. While FDs can be categorised into various fixed deposit types depending on different factors, here is the major distinction based on the interest and returns receivable:
Cumulative FD: A cumulative fixed deposit is a type of FD in which the interest on the principal amount is reinvested and the returns are received with compounded interest. Upon the maturity of the FD, the investor gets the principal amount plus the compounded interest.
Non-cumulative FD: Under such schemes, an investor can opt for periodic payouts monthly, quarterly or annually. The interest varies depending on the duration for which the payout has been selected.
Fixed deposits are a great way to save money and secure your feature, especially when combined with other forms of investment. Before one chooses to invest in a particular fixed deposit scheme, it is wise to compare the rates of interest and benefits offered by different banks and companies.