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Wednesday, April 18, 2018

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Fixed Deposits for Women: A Safe Investment Choice

Thinking whether a fixed deposit for women is a lucrative scheme to go for or not? Read on to find out more details here.

Mrs. Himadree Mukherjee, a resident of Kolkata was in her 40s when she decided to invest a portion of her money in a profit yielding investment scheme. Many of her friends suggested her to opt for a fixed deposit for women scheme as it not only offers a high interest payout, but it also provides assured returns on the invested sum. She did, and is happy to tell anyone, the crash of the stock market had no effect whatsoever on her income.

fixed deposit for women

If you are looking for an investment scheme that offers high interest earnings along with sure-shot returns, you should definitely go for a fixed deposit for women

Listed below are the benefits of parking your funds in such a scheme:

- Significant returns from the investment

If you are a regular citizen below the age of 60 years, you can stand to earn high returns on your investment at rate of interest as high as 7.85%. If you are a senior citizen (here, you will have to be 60 years or older to qualify), select leading financial institutions are willing to offer you an even higher rate of interest. We are talking about rates of the range of 8.20% on your investment. Thus, for senior citizens, such an investment can be a great retirement plan to substitute the salary and to supplement the pension received.

- Assured or sure-shot returns on investment

Unlike some other investment schemes such as mutual funds, stocks, equities and related market instruments, a fixed deposit scheme for women will offer assured returns on investment. This is because market fluctuations or conditions do not impact the interest of an FD. Hence, stocks, bonds and shares may rise and fall in value with the tidings of the money market, but the interest income on the investment in a fixed deposit will continue to accrue interest over the same time period at the rate of interest specified initially.

- Safety

FD schemes offered by banks and Non-Banking Financial Companies (NBFCs) are safe to invest in, and there are no threats involved when it comes to safety of the invested sum. Bank FDs are secured by the Reserve Bank of India (RBI) through an insurance of the tune of Rs.1 lakh if a financial service provider fails to provide the assured benefits and returns to the depositor. Along the same lines, credit rating agencies like ICRA and CRISIL provide safety ratings to financial institutions like NBFCs that set the benchmark for financial security of investments. A high stability rating (For example- MAAA by ICRA and FAAA by CRISIL) will mean that your investments are safe and secured with the NBFC.

- Loan against FD

A woman may need money at any point of her life whenever she faces an emergency situation that requires significant funds. Here, she can either use up her savings or withdraw her FD amount prematurely. Either way, she can be left financially vulnerable as both these options can disrupt the balance.
Loan against FD

For fulfilling such a sudden need, a women investor may opt for a loan against her FD- This is a unique facility that offers quick and hassle-free cash facility. The loan is granted against the FD, which means that the amount deposited in the FD is utilized as the security or mortgage to grant the loan. Investors can avail a loan for as much as 90% of the deposited sum.

- Easy Liquidity

In case if you do not want to avail a loan against your fixed deposit to fund any urgent requirement, you can always choose to withdraw your FD and use it before the end of the maturity period. The only thing that you need to note here is that you will not be able to reap all the benefits of the interest income if you close the FD before the maturity period ends. Depending on the financial institution you have chosen, a certain portion of the invested sum is to be paid as penalty for premature withdrawal- this penalty usually amounts to 1%. The interest rate is calculated in the following manner:

Interest rate on premature withdrawal= Actual interest rate offered on the deposit for the entire tenure - 1 %

- The Minimum Amount of Money Required to Get Started

Being a woman, you need not worry about requiring a huge sum to begin investing in a dedicated fixed deposit scheme. Banks and NBFCs may allow you to begin an investment with as low an amount as Rs.100 only. However, as per the basic rule of investing money – the more you put in, higher will be the interest income you can reap at the end of the maturity period. Thus, it is advisable for FD investors to invest as much as they can in order to reap a larger share of the interest payout.

- Flexible Tenor

Financial institutions allow an FD investment tenor for a timeframe of just 7 days and the longest period to stay invested is as high as 20 years. Depending upon the duration of the tenor chosen, the returns are accrued accordingly. NBFCs provide the option of flexible tenor ranging between 1 year and 5 years to complement your needs and affordability. It has also been observed that in case of longer tenures, the interest income tends to be higher as compared to the shorter tenures. This makes FDs for women a viable investment vehicle for the long run.

Tax Benefits on a Fixed Deposit for Women

Section 80C of the Income Tax Act of India mandates tax benefits of upto INR 1.5 lakhs on the amount invested in a fixed deposit. This means that from the total taxable income from all sources, you can get a substantial tax rebate of the aforesaid amount (maximum) on the deposit made with the bank or NBFC. The interest accrued is liable for taxation at 10% (TDS). However, with a bit of smart financial planning, the same can be saved. Taxation is done when interest from an FD exceeds INR 10,000 in a financial year- so, when investing, you can time it well so that if your interest earnings exceed this threshold, the earnings get split over the two consecutive financial years.

The Bottom Line

Now that you are aware of the advantages and benefits offered by a fixed deposit for women, you can easily start investing in one and get set to gain greater dividends. 

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