- 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 sometimes started giving higher interest for shorter
durations as such banks view that in short span of time, interest rates
will be lower.
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- If you feel that interest rates are going
to fall in future, you should opt for longer duration of fixed
deposits so that you can continue to earn higher interest.
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- 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.
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- 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 of the same bank ,
as in case of emergency, pre-mature cancellation can be got done only
for one FD.
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- 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.
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- 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 some banks.
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- 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, where bank keeps a
minimum sum in your saving account all the time and all the amounts
above that 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.
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