Fixed Deposit or Term Deposit is the most safest investment option. It also avails Tax Deductions under SECTION 80C of the Income tax act. To compensate for the low LIQUIDITY in the market, the fixed deposit offers highest interest rates.
To clear out thoughts : LIQUIDITY basically means Value of an asset which doesnt change over a period of time . In short : Say suppose you have a 100rs note in your purse. It remains the same if you keep it for one day in the purse or years together. Basically an asset which can be used to do transaction immediately without its value changed .
Tax is deducted by the banks on FDs if the interest paid to a customer at any branch exceeds Rs. 10,000 in a financial year. This is in technical terms TDS ( Tax Deducted at Source ) . For those of you who thought why not keep saving money and increasing my bank balance and live your life with the interests from the savings. Its just not gonna happen. you will end paying in taxes.
Maturity Period of a Fixed / Term Deposit is anywhere from 10 days to a maximum of 10 years. One downpoint of FD is that you cannot withdraw money till the maturity date else you will lose the benifits of the same. Consider this as a long term investment.
Almost completely secure and risk free.
Next post gonna be something interesting ( 😛 ) Numb3rCrunch3r in action !!