The most reliable financial instrument for middle-class investors, fixed deposits benefit both account holders and the national economy.

Fixed Deposits (FDs) have long been the most preferred financial instrument for middle-income individuals in India. The decision to park one’s savings is primarily guided by a low-risk appetite and preference to security over immediate liquidity or possibility of higher returns in the stock market. A fixed deposit offers a relatively risk-free way of ensuring that a guaranteed sum is received at the time of maturity. According to statistics released by the Reserve Bank of India (RBI) in early 2019, FDs have consistently maintained a substantial share of deposits with banks, indicating this segment’s collective aversion to risk. But while FDs neither promise returns that are better than those from the equity market nor are as tax-efficient as ULIPs (Unit Linked Insurance Plan) and Public Provident Fund (PPF), they offer several advantages to the investor and economy alike.

Benefits of Fixed Deposit to Investors

The key benefits of having a Fixed Deposit account are as follows:

• Your investment remains safe and secure with no risk of capital erosion
• An FD can be pledged to take out a loan from the bank, subject to its terms and conditions
• Promise of guaranteed returns. The fixed deposit interest rate stays the same all through the tenure, giving an assured interest income. You can calculate your interest income using the IndusInd Bank Fixed Deposit Calculator.
• This is the simplest, most hassle-free investment tool. Anybody with idle funds can set up a fixed deposit account
• Wide choice of FD tenures, ranging from 7 days-10 years
• FDs can be used to save tax and get exemptions.

Benefits of Fixed Deposit to Economy

FDs fuel economic growth in the following ways:

1. Ensures Financial Inclusion

In a developing economy, a significant role is played by financial inclusion or the accessibility of individuals and businesses to affordable and sustainable financial services and products that fulfil their needs. Financial inclusion also impacts deposit mobilisation over a period of time. FDs offer a channel to middle-class investors assuring predetermined returns along with the safety of the principal amount.

2. Spurs Economic Growth by Increasing Financial Capital

FDs effectively mobilise savings within the economy.

Research suggests that in order for a developing nation to achieve sustainable economic development, it must increase its aggregate savings.

The accumulation of savings brings in a higher level of financial capital which in turn contributes to GDP growth, spawning opportunities for capital investment in production and innovation. This spurs a higher rate of economic growth in the country.

3. Boosts Lending Capability of Banks

With rising disposable incomes among middle-class Indians, there are more surplus funds, triggering a need to park those funds. Fixed Deposit accounts meet the dual requirements of safety and returns, leading to their popularity even among first-time investors. Large amounts of money invested in fixed deposits injects funds into banks and financial institutions, boosting their capability to lend capital and loans to underprivileged communities as well as the corporate sector. When businesses expand, jobs are generated and more money circulates in the economy.

IndusInd Bank Fixed Deposit Account

Opening an IndusInd Bank fixed deposit account comes with a number of benefits such as:

a) High Fixed Deposit interest rate

b) Flexible options for payment of interest including monthly, quarterly, half-yearly, yearly, or at maturity

c) Hassle free and convenient instant online booking

d) Flexible tenure

e) Availability of Tax Saver 5-year FD.

Best of all, it is extremely easy to open an IndusInd Bank FD online, requiring only 3 easy steps. All you need to do is visit the official IndusInd Bank website, fill up the application form, share valid KYC documents such as PAN and Aadhar card, and complete the video KYC process online to book an FD of any amount.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.

Everybody works hard to live a comfortable life after retirement, but due to the rise in living costs simply relying on your savings may not be enough. Hence, you must plan and explore different investment options that can secure your future. Balanced Advantage Fund or BAF is one such investment option that can offer great returns provided it is used correctly. To know how BAF can be a good retirement option, you need to know what it is and understand its pros and cons.

What are Balanced Advantage Funds?

Balanced Advantage Funds are funds that invest in both equities and debt but do not have any restrictions on asset allocation. These funds can be allocated as per dynamic market fluctuations. When equity valuations are soaring, fund managers can level up their exposure to equities, and hold back when stock markets decline. Balanced Advantage Funds allow investors to make the most of a bull run without having to risk it all. They are meant for investors with a moderate capital appreciation. This type of investment can also work well for those near retirement and who have moderate risk tolerance.

Balanced Advantage Funds can be either equity-oriented or debt-oriented. In the former, about 60% of your funds would be invested in equities, and in the latter, 60% of your funds would be allocated to debts. The fund manager can also shuffle the allocation as per market volatility.

Benefits of investing in BAF

Investing in BAF can have some benefits, such as:

• Investing in BAF is a low-cost way to diversify your money without having to choose multiple stocks and bonds yourself.
• The fund manager researches and allocates the funds accordingly, hence, if you have a good fund manager you can make profits without doing much yourself.
• BAF is good for those who don’t have ample funds to make investments and also who may not have a lot of knowledge about investing.
• BAF allows systematic withdrawals while maintaining an appropriate asset allocation.

Defects of investing in BAF

Investing in BAF, however, can also have some defects if not monitored properly. They are:

• BAF fees may be a bit higher as a fund manager is automatically appointed to handle your finances and allocate funds on your behalf.
• While investing in BAF, you cannot choose the asset classes for fund distribution. The fund manager will make the choice.

In Conclusion

Your hard-earned money is your most valuable asset hence, it’s advisable that you thoroughly assess all investment options before putting your money anywhere. When it comes to investing in BAF, being able to trust your fund manager is very important. Hence, do your researches well before you make an investment decision. Visit here for investment and other wealth management consultation.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.