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Make your money work even harder for you by investing in FD

If a person knows how to secure his/her money in proper manner then the person is ready to invest that money to generate additional income.  Fixed Deposit is one of the best schemes which financial institutions provide under different types of terms and condition but the result will always be in your favor because at the end of the tenure you will earn money in the form of FD interest return. However when an emergency arrives we withdraw all our money and lose the chance of getting good returns. This emergency may vary from person to person.

Deposits are generally of two types:

  • Fixed Deposit
  • Recurring Deposit

When you go for fixed deposit, you deposit a certain amount of funds in your account and they will get blocked for a fixed time period. When the tenure gets over, a FD interest rate which can be calculated using online FD calculator will be given to you. All this is done with the help of maturity amount calculator where there’s a method to calculate your accumulated money.

When you go for recurring deposit, you can deposit the amount of your interest on a monthly basis and even on that you will get some calculated interest. But the interest rate varies from bank to bank.

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Lift up your earning through partial investments:

You may have noticed that you can earn extra money by investing in one time fixed deposit. But there are some ways where you can increase earning on your investment.  Like if you are investing more than INR 1 lakh, then you can select different banks providing different interest rates. You can fix 25 percent of your investment for 1-year tenure, then another 25% for 2 years tenure, 25% for 3 years of tenure and remaining with 4 years of tenure. So every year one of your FD’s will reach maturity and you will get increased funds every year. This is how you can lift up your earning by partially investing in different banks. And in the case of emergency, you will not have to break your FD and incur a loss of interest and surcharged penalty.

TDS charges:

According to a tax slab, if you are earning less than INR 10,000 per month in return then you don’t need to pay any taxes. TDS will be charged on money you earn if  your income exceeds Rs 3 lakh per annum. The account you open in the bank or any financial body will automatically deduct 10.3 % tax from your funds before you get it.

Merged accounts concept:

If you think of investing your income with your wife/husband, it will help you in avoiding tax charges, then you are wrong. Because one has to pay the taxes anyway. If you add income in the name of your spouse, then too the tax will be charged on the giver or the person who is nominating his/her spouse for the income.

In the case of children it’s quite different if your child is a minor I.e. less than 18 years, then the earned money will be treated as the income of the parents.Funds can be increased with the help of adopting different ways to invest your money. FD investment is one of them, where this can let you get profits at the end of the maturity period but can be a risk too if not invested properly.

Abhay N

Author : 

Abhay is the founder and managing editor of India Microfinance. He is passionate about microfinance, financial inclusion and social entrepreneurship in India.

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