Investing in FDs is generally regarded as a no-brainer. You can just log in to your bank account and create and FD with the click of a button.

However, if you observe carefully, a simple assessment of the timings, amounts and tenor can help you achieve your financial goals with the help of FDs as a smart investment, if only planned properly.

Let us look at various methods of growing your money in smart ways through a fixed deposit –

  1. Use the FD calculator – With various banks and company FD, you should utilise the freely available online FD calculator to check on the calculations for a specific amount, tenor and deposit rate. This will help you understand how much time you need to stay invested. You can decide the tenor as per your required timeline for using the matured FD.
  2. Choose wisely between Cumulative and Non-Cumulative FD – A cumulative FD calculates interest quarterly. But the interest is paid at maturity. In a non-cumulative FD, while the interest is calculated similarly, the pay out at intervals of monthly, bi-annual or annually can reduce the amount for compounding interest, thus earning a lesser effective rate of return.
  3. Choose the Best Fixed Deposit Rates – Look out for special funds such as PPF, Sukanya Samriddhi and Senior Citizen Savings Scheme, along with post office FDs. These are smart ways to ensure investments for specific purpose such as your retirement and for your daughter.

For other general investments, it is always wiser to step outside your regular bank rates and check rates with company deposits like Bajaj Finance FD which offer high rates up to 8.05%. You can easily earn the following returns on investment by investing Rs. 1 lakh on a five year FD with Bajaj Finance –

Customer type Interest rate Interest amount Growth in savings
New customer 7.80% Rs. 45,577 45.57%
Existing customer 7.90% Rs. 46,254 46.25%
Senior citizen 8.05% Rs. 47,273 47.27%

Additional Interest Rate Benefit: You can earn an additional 0.25% as a senior citizen and 0.10% if you are an existing customer or a Bajaj employee.

  • Systematic Deposit Plan (SDP) – You can easily look at new features such as SDP which allow the FD amount to be invested in small monthly deposits at the current interest rate as on the date of deposit. This ensures you do not miss out any high rates when the investment happens. You can choose the tenor of the FD from 12 to 60 months and also decide the number of deposits from 6 to 48 during this tenor. This will also ensure you have liquidity for expenses as well as money is invested in high interest deposits. 
  • Laddering – This is a simple yet rarely used technique of creating continuous stream of multiple FDs with differing tenors and maturities. You can ensure to have a continuous stream of maturities one after the other without worrying about any time period without money. Just create new FDs with the required gap of time and wait for them to start maturing.

Traditionally, bank FDs have been a highly a sought after investment and almost every Indian household has some bank FDs. However, with interest rates going down, it will be a smart decision to lock in your FDs at the highest possible rate. Company FDs provide you the best rates possible.