Fixed deposits are one of the most popular investment options owing to the fact that they yield high interest returns that are guaranteed. Even though FDs are not market-linked, other external factors, like changes in repo rate, affect the FD interest rate. An increase in repo rates causes a spike in the FD interest rate.
Currently, you may be witnessing a high interest rate with two back-to-back repo rate hikes by the RBI. Experts say that any phase in an interest cycle takes several years before completely changing its course. Thus, the interest rate cycle is going to get tighter with time. So, there is a good chance that FD interest rates will also increase. Now, should you wait for a further hike or start investing at prevailing rates? This depends on the interest rate scenarios. Read on know more.
1. If FD interest rates are going to increase, invest for the short-term now and wait till the rates are further hiked
Instead of letting your money sit idle or parking it in a savings bank account while earning a negligible interest, invest a part of it in a short-term FD at the best existing interest you get. You can wait and take advantage of a further hike in the interest rate to invest all your funds. You can also consider reinvesting the initial FD proceeds at the increased interest rate in the future. Investing at different points of time will allow you to take advantage of both the present high interest rate and the higher interest rate that awaits you in future.
- If FD interest rates are stagnant, invest now without procrastinating any further
Even though experts are of the opinion that the current FD interest rate cycle will continue, being overly ambitious about interest rate hikes and postponing your present investments is not a prudent course of action for an investor. This is because it is very difficult to predict how long a particular phase in an interest rate cycle will last. Thus, invest now to make the best out of the current interest rates and offers.
Make the most of the prevailing rates and start an FD investment with reputable issuers like Bajaj Finance that allow to invest anywhere between 1 and 5 years. Bajaj Finance Fixed Deposits have the highest FAAA CRISIL rating, so you don’t have to worry about the safety of your funds. You can start an FD with an amount as low as Rs.25,000 and earn significant interest returns on your investment.
For instance, you can earn an attractive FD interest rate of 8.75% on a cumulative FD if invested for at least 36 months. Senior citizen on the same fixed deposit plan will get returns up to 9.10%. Also, you can use the FD calculator to ladder your FDs so that you can enjoy liquidity over time. Simply easily enter your tenor, investment sum, and interest details on the FD calculator to view the maturity amount for your FDs. Invest keeping an eye on the maturity sum and plan your life goals in accordance to your FDs so that you can access them just when you need to fulfil these requirements.