Top 5 Strategies for Maximizing Your Returns from Fixed Deposits
Have your fixed deposit returns started feeling lackluster and ineffective in fighting inflation? You meticulously set aside savings to grow via guaranteed incomes, but meager yields play spoilsport. Well, fret not! By employing intelligent moves recommended by experts, you can squeeze out extra earnings from fixed deposits to insulate your nest egg.
This guide shares five smart strategies to help you earn inflation-beating returns on fixed-income investments and accomplish financial goals faster. Read on to learn how to compound wealth while keeping your capital 100% protected via optimal FD planning.
Understanding Fixed Deposits
An FD is a safe investment option provided by banks and NBFCs. You invest a lump sum for a predetermined period, which might be anything from seven days to ten years. It gives certain returns in the form of fixed interest that can be reinvested or paid out regularly, depending on your preferences. The primary amount of invested capital is protected.
5 Key Strategies to Enhance FD Returns
The following are some strategies that will help you enhance the efficiency of your Fixed Deposit investment decision and get you good returns:
1. Opt For Cumulative Option
The cumulative FD option automatically reinvests maturity proceeds back into the deposit. This leads to the power of compounding, which boosts overall earnings significantly compared to regular payouts.
2. Ladder Deposits
An FD laddering strategy spreads investments across different tenures. For instance, you can split the total investable surplus into three FDs of 12 months, 24 months, and 36 months, respectively. This provides liquidity via periodic maturity while benefiting from compounding.
3. Reinvest Interest Payouts
If opting for regular interest payouts, redirect the credited amount into liquid funds or savings accounts to earn additional returns. This pools up funds that can be reinvested back into FDs later.
4. Prefer Online FDs
Leading banks offer higher interest rates of up to 0.5% on digital FDs than offline ones to save operational costs. Opting for paperless online FDs can help pocket this extra gain.
5. Senior Citizen FDs
Banks provide up to 0.5% higher FD rates to senior citizens to offer them extra income security. Parking a portion of retirement corpus in these special FDs can enhance returns.
Additionally, compare interest rates thoroughly and revisit existing FDs in a falling rate scenario to lock in gains. Follow these handy strategies to maximise overall yields on fixed deposits.
Conclusion
Fixed deposits offer unmatched safety of capital and steady guaranteed returns, making them a preferred investment avenue. However, in times of rising inflation, investors must employ intelligent strategies to enhance yields and maximise their hard-earned savings.
You can compound returns significantly by opting for cumulative FDs, laddering investments, reinvesting payouts, and preferring online and senior citizen FDs. Follow these handy tips to supercharge income from fixed deposits.
Optimally plan and align your FD investments with long-term financial goals to consistently extract inflation-beating, risk-free earnings. Be a proactive fixed-income investor and make your money work harder for you.
