Easy tips to Get High Rates on Monthly Income Fixed Deposit

Easy tips to Get High Rates on Monthly Income Fixed Deposits

As inflation rises, equities are experiencing a downturn but interest rates on instruments like the FD are rising. In fact, this has been the trend for a couple of months as the RBI has been progressively hiking repo rates. For many leading issuers right from Bajaj Finance to Mahindra Finance and Bank of Baroda, FD rates on offers right now are some of the highest they have been in a while. 

This applies to both FD types, cumulative and non-cumulative, and you can now set up an adequate secondary stream of income with the FD. As a matter of fact, with a ₹40 lakh FD, interest per month, based on the tenure and rate, you can expect to get north of ₹20,000 every month. 

This is quite a notable sum, even though issuers generally offer lower interest rates for non-cumulative FDs. Thankfully, you can optimise your investment to enjoy high FD interest rates, while still getting sizable monthly payouts. To know how, read the following pointers. 

Pick the Right Issuer

One of the crucial aspects of building your portfolio is to find out which issuer would be best suited for your goals. Checking if the issuer provides high interest rates isn’t the only aspect you should be concerned with, but it is important. This is especially true if you are looking to enjoy high rates on a non-cumulative FD. 

Keep in mind that generally, cumulative FDs have higher rates than their counterpart. So, if you want to get monthly payouts, you would need to pick a lender that offers a suitable rate. The easiest way to find a viable instrument is to visit an aggregator website and check the rates offered by various issuers. 

Once you have a list of the top 5 options, compare the earnings using an FD calculator. While you can simply compare the rates, knowing the exact earnings down the last rupee will help you decide better.  

Additionally, choose your issuer based on their safety ratings. This is particularly important when deciding on a company FD as the security of your investment is key. You can do this easily by checking the credit ratings issued by agencies like ICRA, CARE, or CRISIL. 

Ideally, you should pick an issuer with high rates. This way you can rest assured that your investment capital and interest earnings are at minimal risk. The Bank of Baroda FD has been rated as AAA/ STABLE by CRISIL and AAA(stable) by ICRA. Plus, the Bank of Baroda FD rates are best suited for risk-averse investors looking for steady and high returns.

Choose a Large Corpus and Longer Tenure

Choosing an FD with the goal to invest for the long haul is smart. If you opt to get monthly payouts, it can work in favour as it can supplement your income while ensuring that your corpus’ value isn’t eroded by inflation. In any case, the best way to get the highest interest rates on offer is to invest over a longer tenure, generally around 3 to 5 years. 

This is because most issuers offer their best rates on longer tenure options. Besides the longer tenure, investing a large corpus is key to getting adequate monthly returns. As mentioned earlier, with a ₹40 Lakhs FD, interest per month would be between ₹20,000 and ₹30,000, given the current rates. 

So, if you need a higher yield, you would have to invest a much larger sum. Do note that the sum you invest does not affect the interest rate you get, but it does affect your earnings. So, invest appropriately to get the most out of your FDs. 

Use an FD Calculator

While you would generally use an FD calculator to precisely predict the earnings you would receive on the maturity of an FD, it can help you find the best terms too. This is because most online tools offered by issuers dynamically change the rates offered based on the tenure you pick. 

So, if you are looking to invest at the highest rates on offer, simply go to the issuer’s website and use their FD calculator. Be sure to set the payout mode and enter the right investment amount. Once done, simply try different tenure options until you find one that offers you the best rate and earnings. In some cases, the issuer may not have a dedicated FD calculator, and you may have to manually check the rates table. 

When the goal is to enjoy high monthly earnings from your FD, these tips should help. In fact, it would be advisable to lock-in your funds right away as the interest rates are favourable. However, be sure to do your due diligence and forecast your earnings before investing. 

What is the Market Linked Investment Options with Income Tax Exemptions?

We all have give up a portion of our earnings to the government in the form of taxes. In fact, because the Indian taxation system is progressive, higher income is taxed more than lesser income. This decreased the tax incidence on low-income individuals. In contrast, the government provides help to taxpayers through the provision of exemptions and deductions. This is done in order to encourage taxpayer investment. The following are a few tax-free market-linked investment possibilities.

• ELSS (Equity Linked Savings Schemes)
• NSC (National Savings Certificate)
• SSY (The Sukanya Samriddhi Yojana)
• NPS (National Pension Scheme)
• ULIP (Unit Linked Insurance Plan)