What Should you Know about Investing in FD for 10 years? Indian Banking

As per a survey by SEBI, conducted last year, 95% households park their money in Fixed Deposits. They are safe and offer assured returns. The dilemma people often face is regarding the tenor chosen. Fixed deposits can be categorized into short-term, mid-term and long-term investments.

Benefits of mid-term fixed deposits for ten years

  • It helps you meet financial goals as the interest rate offered is quite high, 8.40% onwards
  • It is better than a savings account as it lets you earn interest on your savings
  • Senior citizens can enjoy a slightly higher rate of interest (by 0.35%)
  • It offers overdraft facility
  • It is free of market fluctuations and offers assured returns and stability
  • The interest income is tax-free up to Rs. 10,000. Applicant can furnish Form 15G and 15H to have no tax deducted on interest income of more than Rs. 10,000

Most financial institutions and NBFCs offer lucrative interest rate for fixed deposit to save you time and to support your financial goals.

Inflation, global fuel prices, agricultural yield, all have a direct impact on interest rates. The correlation between inflation and interest rates is cyclic. When interest rates on loan go down, people have more money to spend, thus giving a boost to demand and pushing up prices; and when prices go up, people start saving money, interest rates on saving instruments go down.

It impacts savings and Fixed Deposit interest rates too. It’s always suggested to take the “laddering approach” while investing in Fixed Deposit (FD), which means invest in multiple fixed deposits at different times, for different tenor. It provides a cushion to fluctuating interest rates.

How to earn more from FD of 10 years?

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Fixed deposits with a tenor of 10 years have an advantage of piling up the interest returns over the course of years. Some other factors that help to increase your returns include:

  • Amount invested
  • Compounding frequency
  • Interest payout type

Fixed deposit investment for ten years is one of the best and safe investment options to secure your hard-earned money. You can check your eligibility and interest income earned by using the online Fixed Deposit Interest Calculator.

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