6 Ways Fixed Deposits Strengthen Your Portfolio

Even though newer investment options are regularly introduced in India, Fixed Deposits (FDs) have retained their popularity. No matter your risk profile, FDs can be a vital addition to your portfolio for their ability to generate fixed returns over a fixed tenure.

1. Minimize Portfolio Risk

FD investments are not market-linked. Banks pay guaranteed returns on your Fixed Deposit, given that you remain invested for the entire chosen tenure. As a result, FDs can be an effective tool in reducing portfolio risk. 

For instance, if you’ve built an aggressive portfolio with potentially higher-risk investments like stocks, you can reduce the portfolio risk by adding a Fixed Deposit. Even if you’re a risk-averse investor, you can invest in FDs to generate competitive returns.

2. Achieve Financial Objectives That Cannot Wait

We often have goals we’d like to achieve within a fixed timeframe. For instance, if you’d like to take your family for an international vacation next year, you already know the exact tenure within which you want to fulfil this objective and the estimated cost. 

Based on these aspects, you can book an FD account and invest the required amount for a preferred tenure to ensure you have the funds before the vacation. 

3. Meet Short-Term Goals

With short-term investments, it is vital to keep risks to a minimum. At the same time, you’d want to generate decent returns on the investment. A High Interest Fixed Deposit effectively fulfils these requirements. 

With AU Small Finance Bank, you can book AU Regular Fixed Deposit Account for tenures ranging from 7 days to 10 years. Moreover, you also get the flexibility to choose the payout frequency from monthly, quarterly, and cumulative (at maturity). 

4. Lucrative Returns

With most other market-linked products, you never know the exact return your investment will generate. Thus, it can be challenging to plan your finances. Opening a Fixed Deposit Account with AU Small Finance Bank effectively eliminates the inconvenience by generating assured returns at high interest rates annually. Apply now.

Irrespective of what the economic climate of the country is, the Fixed Deposit interest rates will remain the same as it was promised at the time of opening the account. 

5. Save Taxes

AU Small Finance Bank also offers AU 5-year Tax Saving Fixed Deposits. Investment in this type of FD is eligible for tax deductions of up to INR 1.5 lakhs under Section 80C of the Income Tax Act, 1961. These FDs have a fixed tenure of 5 years, and no premature withdrawals are allowed.

However, the interest earned from these FDs is taxable just like a regular Fixed Deposit investment. 

6. Benefit from Compounding

The power of compounding is one of the key benefits of Fixed Deposits. Compounding means generating interest on the already accumulated interest. By reinvesting the returns, you generate from your FD investment, you can leverage the power of compounding to grow your wealth further. 

And if you’ve chosen a Fixed Deposit that offers highly competitive interest rates and continues to reinvest the generated returns, it can play a significant role in helping you achieve your long-term financial objectives. While investments such as equity also can offer you this advantage, FD is great if you want to benefit from compounding without the associated risks.

• FDs are ideal additions to any financial portfolio due to the extensive benefits discussed above

• With AU Small Finance Bank offering one of the High-Interest Rate Fixed Deposit for tenures ranging from 7 days to 10 years with a minimum investment of INR 1,000, the leading bank can be an excellent choice to open an FD Account

• You can apply for AU Regular Fixed Deposit online through AU 0101 App or through our AU Video Banking facility, or visit our nearest bank branch

*Terms and Conditions apply. Rates are subject to change at the sole discretion of AU Small Finance Bank.