6 Important Things to Know About Fixed Deposits

Fixed deposits at banks are one of most convenient, safe and hassle-free investment instruments that also provide reasonable returns. With the advent of online banking these days, you can open FD online within few seconds and clicks.  The tenures in fixed deposits are fixed and usually provide higher return on higher duration. For example, a one-year deposit might fetch 6% per annum return while a 5-year deposit might fetch 7% per annum return depending upon the financial institution. Following are some of the key things to know about fixed deposits:

1.  The rate of return on fixed deposits is fixed. Unlike other high-risk investments like stocks, mutual funds, and debt funds, FD Interest rates aren’t dependent on fluctuating market rates.

2.   All banks provide flexible tenures to choose from. You can open an FD account for as low as 6 months to a maximum of 5 years.

3.   You can avail loan against your Fixed Deposits. Some banks provide up to 90% of the total FD value as personal loan. Unlike other unsecured personal loans, you get lower interest rates when you secure your loan with your FD as collateral.

4.   You can choose between cumulative and non-cumulative options. In cumulative fixed deposit option, interest is accumulated over the tenure of the FD and is paid only at the time of maturity. This helps you in getting a lump-sum amount on maturity. You can use a simple FD Calculator to know the amount you will receive on maturity. A non-cumulative FD works on the opposite principle. In these fixed deposits, the interest payments are made to the investor in a periodical, steady, and timely fashion. This makes it the most sought-after investment option by retired investors, or those who seek frequent cash flow.

Debit vs Credit cards – Which one is better for you?

While shopping you have the option of paying either through your credit card or your debit card. Though the difference might not appear, but there is a huge difference the way payment is processed behind the scene.

Paying through Debit card is almost like paying cash and is usually without transaction charges. Payment though debit cards is also instant. On the other hand credit card transaction requires a signature, and is processed by the credit card company. The funds may or may not be immediately deducted from your bank account, depending on how the retailer handles their transactions. Some stores "batch" their credit transactions and send them at the end of the day. Unlike debit cards, to the merchant, processing a transaction as credit usually involves a credit card transaction fee to the major issuers, like Visa and Mastercard. 

Credit cards are mostly a better option while shopping online because of host of offers provided by issuer banks such as interest free EMI, zero transaction charges and higher reward points. It is also relatively safe as you are never liable for unauthorized charges, unlike debit transactions, which are the same as cash. It is advised to use your credit card while purchasing a flight ticket as many companies offer air miles for purchasing the tickets through credit card.

6 Benefits of Buying Term Insurance Online

People are increasingly getting aware of advantages & disadvantages of various life insurance products available in the market and carefully assess their personal needs before buying one. This is primarily happening in urban India because of variety of factors coming together such as easy access to internet, loads of educational content on blogs & forums and variety of products offered by many insurance companies.

One such theme which is widely getting popular these days is term insurance plan which, unlike conventional insurance schemes (endowment, money back etc. ), provides pure protection  and is solely taken with the intention of protecting the dependents in the family. There are many benefits of taking a good term insurance policy but the main benefit that comes with it is large coverage at affordable cost. Since term insurance is a pure protection product, companies are able to provide very competitive rates.

While the amount of suitable coverage varies from person to person based on their need, in general I recommend a sum assured of 10 to 12 times of one’s annual income. So if one is earning INR 5 lacs per year, the ideal term insurance he / she should take is INR 50 to 60 lacs. Off course the more the better but the premium also increases with the increase in sum assured and might not be suitable for the earning profile. You can use a term insurance calculator to check the premiums of various sum assured levels and decide what is best for you.  Here are the 6 benefits of buying a term insurance online:

1. High coverage at affordable premium: Term insurance plans provide a very high life insurance coverage vis-à-vis conventional insurance plans. For example for 30 year old person a typical endowment insurance policy with coverage of INR 50 lacs for 25 years would roughly cost INR 2 lacs in premium per annum while a typical term policy of same sum assured and tenure would cost less than INR 10000 per annum. Off course endowment policy provide some return on premiums invested but if the objective is pure protection and your investments are planned elsewhere, term insurance is the best option.