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Benefits of flexi fixed deposits
People often hear about the drawbacks of investing in fixed deposits nowadays. Banks usually offer low interest on the deposits compared to other investment options. The absence of flexibility, tax implications, and the effects of inflation has meant that this traditional saving instrument has lost some significance over the years. However, that’s not the case for all types of fixed deposit (FD). Here, we take a look at flexi fixed deposit and it offers.
What is a flexi fixed deposit?
A flexi fixed deposit (FD)is a financial instrument created by combining features of a fixed deposit and savings accounts. It is a unique financial instrument that offers investors the liquidity of a savings account and the safety of a term deposit. Due to these dual benefits, flexi FDs are preferred by many savers.Advantages of investing in flexible fixed deposits
Investing your money after careful consideration is part of a sound financial plan. You need to evaluate the benefits of a financial product and how they help meet your goals. Here, we take a look at some of the benefits flexible fixed deposits offer.- Flexible deposit amount: Investing in a flexi fixed deposit allows you to choose your investment amount. You can decide how much you want to invest as per your needs. The amount you can put in a flexi FD varies across banks.
- Higher interest rate: The flexi fixed deposit interest rates are usually higher than your regular savings account.
- Choose your investment tenure: You can customise the investment tenure based on your financial goals.
- Withdrawal process: Among its various advantages, another is premature withdrawal. You can close a flexi FD before its maturity in case you need access to your money due to an emergency.
- Loan facility: Some banks let you avail the facility of a loan (overdraft) on a flexi fixed deposit. You can avail up to 95% of the deposit amount at a lower interest rate. You need to check with your bank if this facility is available.
How is flexi FD different from standard fixed deposits?
A flexi fixed deposit is a popular financial instrument that allows investors to build a larger corpus while maintaining liquidity. It comes with fewer restrictions and better returns than a standard fixed deposit. However, consult your financial advisor and check the terms and conditions with the bank before investing in this instrument.
Also Read: Benefits of investing in fixed deposit
Disclaimer - This article is for information purposes only and should not be considered investment advice. Please consult your financial advisor and/or carry out your own research on any of your planned investments.
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FAQs
What is the minimum duration for which I can open a flexi fixed deposit?
The minimum duration for opening a flexi fixed deposit varies from one bank to another. Some banks in India allow you to open an account for a period of one week.
What happens to my flexi FD if I don’t withdraw the money at maturity?
If you don’t withdraw the money in your flexible FD at maturity, most banks will auto-renew it, depending on their policy.
Should I invest in flexi FD or regular FD?
It depends on your goals and the kind of returns you are expecting from the invested amount.
