Invest in Short-Term Fixed Deposit
If you have capital and want to open a fixed deposit or renew a current one, but the current interest rate is low or not up to your expectations, you should choose a shorter-term deposit. Because your short-term Fixed Deposit is not locked at a lower rate for a lengthy period of time, you may plan ahead for your long-term Fixed Deposit. When short- to medium-term rates rise, you may start raising the Fixed Deposit’s duration to match.
Compare Fixed Deposits
Compare all the Fixed Deposits in your portfolio. Compare, Bank Fixed Deposits, Corporate Fixed Deposits compare each one with wish risk, interest, and tenure. Each Bank Fixed Deposit offers a different interest rate. Even among business Fixed Deposits, each lender will offer a different interest rate. As an investor, your objective should be to select the one that will provide you with the best return on your investment with security. To do this, you must select a fixed deposit only after weighing the pros and cons of various Fixed Deposits on the market. Institutions such as CRISIL provide ratings on company Fixed Deposits.
Go for Multiple Fixed Deposits
First and foremost, every investor should take into account that all types of investments and financial instruments come with some level of risk. As a matter of fact, there are no risk-free investments in today’s unpredictable environment. Every investment has some level of danger, which we as individuals fail to recognize. You may, however, circumvent this by constructing an Fixed Deposit ladder. Simply divide one large Fixed Deposits into smaller Fixed Depositss and book them for different tenures. Doing this makes your investment secure to a certain extend.
Invest in Floating Rate Fixed Deposit
In Floating Rate Fixed deposits the interest rate is not fixed for the full term of the deposit, but fluctuates in lockstep with a reference rate that is adjusted on a regular basis. This deposit allows the investor to benefit from interest rate fluctuations without having to close and re-book Fixed Deposits. The rates given are synchronized with the Bank’s Treasury Bill rates, which are auctioned every two weeks on the RBI website, and with a mark-up that will be re-set once a year. Floating Rate FDs are a sensible option for low-risk Fixed Deposit investors, who don’t want to take any chances with the interest rate cycle and would like to invest for the long haul.
Original news source Credit: www.goodreturns.in