Interest Rates: Where To Invest Now When Interest Rates Are Falling?

The biggest concern during the economic crisis is where should you invest your money? Share markets are more volatile than ever, the amount of risk involved in investing in various sectors has increased over time. With the ongoing situation and decrease in investment return, investors are getting more sceptical about investing their savings. Also, the inflation which is decreasing the value of money over time is something that can make all of us worried.

The volatility of the markets signals that the good old fixed deposits are one of the best investments at this point of time. FDs are secure, and offer guaranteed returns.  Even though there are various low risk investment sectors in which you can invest such as bonds, PPF, liquid funds or small savings scheme, but company FDs offer better returns as compared to most other fixed-income options. FD interest rates in India go up to 7.85% with company FDs such as Bajaj Finance FD which makes fixed deposit a good fixed-income investment.

Here are some more reasons why you should prefer fixed deposits among these low risk investments.

Flexibility:

The flexibility of receiving payments in fixed deposits makes it more convenient. You can choose to receive cumulative or non-cumulative payments. With a cumulative fixed deposit, your quarterly interest earnings are reinvested with the principal, and the entire amount is paid at maturity. With non-cumulative FDs, you can choose to receive interest payouts at periodic intervals, i.e. monthly, quarterly, semi-annually, or annually. 

Online tools have provided more ease and security while investing in FDs. Even if an investor doesn’t know how to calculate fixed deposit interest they can always go online and use the fixed deposit interest rate calculator. Loan against FDs helps in reducing the need to break a FD before maturity. Multi deposit facility helps in reducing the need of breaking the entire FD before maturity. 

Stability:

Apart from flexibility and high FD rates, fixed deposits also offer stable, guaranteed returns. You can check the stability of a fixed deposit instrument by checking its stability ratings. For example, Bajaj Finance FD has one of the highest stability ratings in the industry, i.e., FAAA/Stable by CRISIL and MAAA/Stable by ICRA. These ratings indicate that your investment is safe and you will receive your returns timely, irrespective of market conditions. 

Advanced Features:

To maximise your returns from an FD, make use of advanced features such as the Systematic Deposit Plan (SDP) and auto-renewal facility. With the SDP feature, you can start investing in a series of small monthly deposits starting from Rs. 5000 per month; each deposit will fetch you all the benefits of a regular FD investment and the interest rate as prevalent on the date of the deposit.  Thus, you can take advantage of any change in interest rates, especially when the economy recovers and inflation sets in.

Fixed Deposit has been the most sought after instrument of choice for ages. It might seem it has lost its sheen in recent times with multiple market linked products. However, with market crashes and uncertainty prevailing from political-economic factors, fixed deposits are the silent beneficiaries of savings of the large middle class population of India. 

FD rates in India have been declining during these turbulent times, because of falling repo rates. Therefore, it makes sense to lock-in prevailing high FD rates.