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Rajesh Goyal 

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Tip No 1 :   You should try to keep your surplus funds  in Fixed Deposit for a longer duration if you feel you will not need the funds during the tenure of the deposit, as longer maturity deposits usually give higher returns. However, in recent times, banks have also  been  giving higher interest for shorter durations as such banks do not want to lock their liabilities at a higher rate of interest as they are of the   view that soon interest rates will come down.    Thus, in such a situation also, you should opt for longer duration fixed deposits (if you are not likely to need such a money in next few years).   Thus, you will be able to lock in good rate of interest for a longer period.

! Tip No 2: If you feel that interest rates of longer duration deposits are going to fall in future, you should opt for longer duration of fixed deposits so that you can continue to earn higher interest. 

Tip No 3:  If you feel that interest rates are likely to go up in near future, you should opt for the fixed deposits for short maturities, so that as and when the interest rates go up, you should be able to re-invest the funds at a higher rate.

Tip No 4:  If you plan to invest large sum say, Rs.1,00,000/- or above, you may opt for more than one fixed deposits in different banks or branches or of different durations in the same bank , as in case of emergency, pre-mature cancellation can be got done only for one FD.   (However, now a days some banks allow pre-mature option for part withdrawals also (see next tip also)


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Tip No .5 Explore the possibilities of investing in new variant of Fixed Deposit schemes, called by different names.   In such cases, the FD is kept in denominations of Rs.1000/- each and in case of need you can ask for the pre-mature cancellation of the amount you actually require and thus save the penal interest for pre-mature cancellation on the whole amount of the deposit.


Tip No 6 :  If you are not a good record keeper of the maturity of your deposits, you should opt for auto renewal of the deposits as offered by most of the banks these days

Tip No 7 : If you keep large sums of money in savings account or current accounts, but wants full liquidity, you may opt for schemes like 2-in1 deposits or smart deposits or auto sweep, where bank keeps a minimum sum in your saving account all the time and all the amounts above that threshold will be automatically shifted to a fixed deposit.   Such banks even allow automatic pre-mature cancellation as and when some cheques are presented for payment.


Tip No 8 :  In case the earning of interest on your deposits in a year is likely to exceed Rs.10,000/-, but you do not want the TDS to be deducted, split your fixed deposits in different branches / banks.   (However, if your total income, including interest earned exceeds the exempted income for income tax, you will have to pay tax at the time of filing the income tax return.   Thus if you are a honest tax payer, this is not going to make much difference.)


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