Fixed Deposit Investments provide a means of protecting your principal investment amount. No financial portfolio can be complete without the presence of Term Deposits.
If you have Fixed Deposits in your portfolio, you will always have a provision for liquidity. You can also avoid making withdrawals from your equity investments when the markets are low and give them the time they need to grow.
Maximizing returns from your HDFC Fixed Deposits is as simple as investing in them.
Here are ideas you can use to maximize your HDFC Fixed Deposit returns.
1) Continue your Fixed Deposits till the End of the Term
A lot of people select longer terms as Fixed Deposit interest rates are higher for longer terms but they end up withdrawing their HDFC Fixed Deposits prematurely. This result in losses because on premature withdrawals, you get interest only till the day you’ve stayed invested. Also, a withdrawal penalty is applicable.
If you need money, you can take a loan against your HDFC Fixed Deposit instead. The loan interest rate is a bit low too. If you need money often, you can create a Fixed Deposit Sweep-in Account.
2) Use a Ladder Investment Strategy for your Fixed Deposit Investments
A Ladder Investment Strategy is one in which you have Fixed Deposits that have different dates of maturity. This way, you can ensure you have enough liquidity. You can also take advantage of higher interest rates by keeping some deposits for the longer term.
3) Choose Cumulative Fixed Deposit Schemes
In Cumulative Term Deposits, the interest is not paid out, but it is re-invested. Re-investing earned interest gives you a compounding effect on your HDFC Fixed Deposit investments. If you do not need a source of income, this is a good way to maximize the returns from your Fixed Deposit investments.
Non-cumulative Fixed Deposits pay out the interest at regular intervals. So, they offer no compounding effect. Yet, non-cumulative Fixed Deposits are a fine way to get regular income.
4) Invest in Corporate Fixed Deposits with Higher Credit Ratings
Corporate Fixed Deposits are also an option if you wish to invest in Term Deposits. Many corporate deposits offer higher interest rates when compared to bank deposits.
Always ensure you select a reputed corporate Fixed Deposit with a AAA credit rating. Do some further research on them by taking a look at the interest rates they have been offering over ten years or so.
5) Submit Form 15G or 15H
If the total annual interest from your HDFC Fixed Deposits is higher than INR 40,000/- but your yearly income is below INR 5 lacs, you can submit form 15G or 15H. By submitting form 15G or 15H, you can prevent the deduction of tax on your Fixed Deposits.
6) Place your Fixed Deposit Investments in your Parent’s Names
Most banks offer higher rates of interest to senior citizens. HDFC Fixed Deposit interest rates are about 0.5% higher for senior citizens. By placing your HDFC Fixed Deposits in your parent’s names, you can get higher interest rates.
7) Invest in Fixed Deposit Schemes Online
Some banks offer higher Fixed Deposit interest rates to investors who invest in Fixed Deposit Schemes online. Whenever you wish to invest in Fixed Deposits, ask the bank or the company if they offer a higher interest rate if you were to invest online.