Fixed deposits are popular investment options as they offer reliable and guaranteed returns. However, traditional FD issuers offer deposits with little flexibility, which can discourage novice investors from investing in them.
Thankfully, there is a change in this trend with the introduction of different types of fixed deposits. You can explore multiple FD options, like a Flexi FD, and enhance the earning potential of your investment.
But before you invest, understanding the meaning and features of various FDs, including a Flexi FD, is crucial. This will enable you to make decisions that align with your finances and goals.
Read on to learn about the Flexi FD, its attractive features, and more.
What is a Flexi Fixed Deposit?
A flexi fixed deposit or a Flexi FD, as its name implies, is a flexible investment option providing enhanced freedom and convenience. This unique type of fixed deposit seamlessly combines the features of a traditional fixed deposit and a savings account.
With a Flexi FD, you get higher interest rates for your fixed deposit as well as the liquidity associated with a savings account. You have the flexibility of depositing any amount in this type of fixed deposit according to your preference.
Furthermore, this type of fixed deposit grants you the freedom to make partial withdrawals from your investment as needed. This FD plan merges the benefits of the compounding power of FDs with the easy withdrawal option you can get from a savings account.
You can invest in a tenor of your choice and opt for withdrawals based on your financial requirements.
Features and Benefits of a Flexi Fixed Deposit
A Flexi FD comes with a host of attractive features and benefits. Here are some of the advantages of this FD scheme.
1. Competitive Interest Rates
A notable advantage of a Flexi FD is that it offers higher interest rates as compared to interest rates offered by a savings account. So, when you opt for a flexi fixed deposit, you get the opportunity to earn better returns on your investment. These returns can significantly contribute to the enhancement of your wealth over time.
Along with that, you can also enjoy the liquidity of a savings account, which means you can withdraw funds anytime you want. So, if you have a lump-sum corpus lying idle in your savings account, opting for a Flexi FD is the best option. This is because it can generate handsome returns. Additionally, you can compare various interest rates and choose an issuer offering higher rates.
As FD rates decide your earnings, choosing the right plan is crucial. You may use a fixed deposit calculator to compute your returns as well as the total amount it will amass at maturity. All you have to do is enter the tenor, FD rate, and the investment amount to calculate your earnings instantly.
2. Flexibility to Choose the Investment Amount
You need to make just a one-time lump-sum payment while investing in a Flexi FD. You have the freedom to decide the exact amount you wish to invest. Hence, this investment option is even accessible for investors who do not want to invest large amounts.
It is essential to know that different banks have different minimum deposit requirements. Therefore, it is best that you confirm the amount with the financial institution before finalising your investment.
3. Convenient Premature Withdrawal Option
Another significant advantage of investing in a Flexi FD is that you get the freedom to withdraw funds prematurely. This flexibility of withdrawing funds from your investment during times of need helps you enjoy instant liquidity.
However, note that not all financial institutions offer this facility. So, enquire about premature withdrawal before choosing this scheme.
4. Flexibility to Choose the Tenor
With a Flexi FD, you get the option to select a tenor for your fixed deposit that best aligns with your investment objectives. This way, you can remain invested for a duration that suits your needs.
You can choose a shorter as well as a longer investment tenor based on your requirements. For instance, if you require funds right around the corner, you can opt for a short-term FD. Similarly, you can select a longer tenor if you need to meet long-term goals, such as funding your child’s education, meeting marriage expenses, etc.
Typically, a Flexi FD has a wide tenor range. You can generally choose to book an FD for 6 months to 12 months and even go up to 10 years.
5. Streamlined Account Opening Process
Investing in a flexi fixed deposit is a straightforward process. Today, most financial institutions have digitised the account-opening process, allowing you to invest from the comfort of your home.
You simply need to fill out a form and provide some essential information, like the investment amount and duration, to book a flexi fixed deposit. Along with that, you need to provide some personal details, including your phone number and address.
That is all it takes to book a flexi fixed deposit with a majority of the leading issuers across the country.
6. Loan Against Fixed Deposit Facility
Financial institutions extend the facility of obtaining a secured loan against your flexi fixed deposit. You can get up to 90–95% of your fixed deposit amount as credit at minimal interest rates. In these types of loans, your fixed deposit acts as collateral for the loan.
Remember that not every financial institution offers this facility. So, confirm with the FD issuer if you plan on getting a loan against your fixed deposit.
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7. Auto-renewal Feature
Managing multiple investments, credit payments, utility bills, and other types of obligations can become overwhelming. In case you miss the maturity dates of your fixed deposit investment, you can miss out on its renewal.
However, many financial institutions provide an auto-renewal facility for a Flexi FD, sparing you the need to remember specific dates. You can set up this facility, and the issuer will automatically renew your investment as and when a particular FD matures.
As you can see, a Flexi FD offers a plethora of benefits, making it an appealing investment option. With the low risk of traditional FDs, you also get to enjoy the enhanced flexibility of savings accounts.
Before investing, make sure that you compare various types of fixed deposits and choose the best fit that aligns with your investment objectives.
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