Bank Deposits ( No Risk, Limited gains)
Saving Account
Saving Account is a Bank Account on which Bank
offers a fix rate of interest on your deposits.
(ii) The interest such offered is compounding
interest. These days normal rate of interest on saving account is between 3.5%
to 6% per annum, which is credited on monthly/quarterly basis to your account.
(iii) Saving accounts are highly liquid and you
can withdraw deposited money anywhere, anytime through Bank branch/Bank ATM
visit. However ATM withdrawal has some daily/transaction limits.
(iv) You can also link your saving account to UPI/wallets
like PayTM, PhonePe, GPay, AmazonPay for fast transactions of all type such as payment
of shopping, transfer funds to other account, online shopping, Loan installment
payment, receiving money online etc.
(v) You can open saving bank account in Public
Sector or Private Sector Banks with minimum KYC requirements, Many Banks offer
instant account opening facility through their Mobile Apps.
Recurring Deposits in Banks/ Post Office
Apart from saving Account and Fix deposits, there
is an another form of Bank deposits called RD or Recurring Deposits.
(ii) For Recurring Deposits bank offers rate of
interest higher than saving account, however with a fix minimum lock in period
like 1 year of 3 year.
(iii) In RD you have to deposit a fix amount in
bank every month and you can withdraw money including interest credited on the
date of maturity.
(iv) Post office offers higher rate of interest
on RD.
Fixed Deposit (FD)
FD is an investment
instrument provided by Banks and Non Banking Financial Companies (NBFC). For FD
one need to deposit money in Bank/NBFC for a fixed tenor on a fix rate of
interest as return. FD is one of the most popular investment instrument in
India.
Benefits : (i) Your money is safe from market ups and downs, you will receive the amount fixed on date of FD as per interest rate on date of investment.
(ii) Nowadays, you can create FDs online
through various banking apps, you can select periodicity (7 days to Multiyear)
according to your need and liquidate FD at any point of time too.
Disadvantages : (i) Yes, we receive interest better than saving accounts on FD, but while comparing with Rate of Inflation, specially in terms of our country India where rate of inflation remains 5% or more, overall returns on FD becomes negative, and
(ii) If you are a tax payer or getting interest
on FD above INR 40,000 per annum (INR50,000 in case of Senior Citizen), TDS at
10% will be deducted.
