Short term fixed deposits i.e. short term FDs provide many types of benefits. These FDs, which generally have a maturity period of less than one year, give investors a better opportunity to park their funds and earn good earnings while maintaining liquidity.
One of the primary benefits of short-term FD is its flexibility and liquidity. Unlike long-term FDs, short-term FDs allow investors to access their funds relatively quickly. This liquidity feature makes them suitable for individuals who may need access to funds for expenses arising for various reasons in the near future.
Apart from flexibility and liquidity, short term FDs offer guaranteed returns. The interest rates on such FDs remain fixed at the time of investment. In such a situation, investors get clarity on their earnings. Fixed rates are better for investors who want stability in their investment portfolio, especially during uncertain economic times or volatile market conditions.
Investor’s money remains completely safe in FD. Apart from this, guaranteed returns are also available in it. Along with long term, investors also get good earnings on FDs maturing in short time. If you are thinking of earning good money by investing for a short time, then this can be useful news for you.
Another advantage of short term FDs is their simplicity and ease of investment. The process of opening this FD account is very easy, it requires less documents. Usually accessible through online banking platforms. This feature makes it an attractive option for both experienced investors and those new to financial investing.
For investors who want to diversify their portfolio and manage risk, short-term FDs serve as a stable asset category. They offer reasonable returns as well as capital protection, making them the preferred choice for investors or those seeking a balanced investment strategy. By investing some part of their funds in short-term FDs, investors can reduce risk while maintaining liquidity.
Additionally, short term FDs can act as a temporary parking space for funds between investment opportunities or during periods of market uncertainty. Instead of keeping idle funds in a regular savings account earning minimal interest, investors can choose short term FD option to earn good earnings without compromising on liquidity.
Talking about tax, short term FDs also provide benefits to investors, especially for investors in low tax brackets. The earnings from short-term FDs are generally added to the investor’s income and taxed accordingly. However, investors can explore tax saving FDs or use their annual tax exemptions and deductions to optimize their tax liabilities.
You can use this type of investment to meet your near-term needs like vacation, shopping, education fees, home renovation etc. However, it is important for investors to consider certain factors while investing in short term FDs, such as interest rates, penalty for premature withdrawal and any other charges.
These banks are giving the highest interest for 6 months FD
Additionally, short term FDs usually come with better return offers compared to savings accounts or other short term investment options. However rates may vary between banks and financial institutions. In such a situation, investors can decide to invest by being wise about various bank FDs and their interest.
(Note: The data included in the above list is taken from the website of the concerned bank till April 11, 2024)
