Fixed deposits (FDs) have always been one of the oldest and safest investment tools for many investors in Nigeria. For years, FDs have been the first choice for investors who want to invest their money in fixed income instruments that bring assurance of guaranteed returns as well as security of principal amount. Fixed deposits can also serve as a regular income source of investment for many investors and even individuals. We've seen financial institutions like Cowrywise and Piggyvest roll out investment features on their platforms over the years.
Fixed deposits, also known as term deposits or time deposits, are investment products offered by banks and financial institutions. When you invest in a fixed deposit, you agree to deposit a sum of money with the institution for a specified period of time, known as the tenure of the deposit. In return, the institution pays you a fixed rate of interest on your deposit, which is usually higher than the interest offered on savings accounts. Peerlender offers up to a 14% interest on funds.
Everyone is constantly looking to turn one into two in a smart way. Putting your money to good use to yield good returns is what investments are all about. In this article, we will explore five compelling reasons why investing in fixed deposits should be on your financial to-do list.
Benefits of Investing in Fixed Deposits
#1: GUARANTEED RETURNS
Fixed deposits are popular investment options for those seeking security and stability. One key benefit of investing in fixed deposits is the guaranteed returns they offer. Unlike other investment avenues that are subject to market risks, fixed deposits provide a fixed rate of interest over a specified period. This makes them an attractive choice for conservative investors looking to protect their capital while earning a predictable income.
#2: FLEXIBILITY
Another advantage of fixed deposits is their flexibility. Investors have the option to choose the tenure of their fixed deposit, ranging from a few months to several years. This flexibility allows investors to tailor their investment strategy according to their financial goals and liquidity needs. Additionally, fixed deposits are easily accessible and can be opened with a relatively small amount of money, making them a convenient option for individuals looking to start investing.
#3: SECURITY AND STABILITY:
Fixed deposits offer a sense of security that is unmatched by many other investment options. Since fixed deposits are typically offered by banks and financial institutions, they are considered a safe investment choice. In addition to the guaranteed returns, fixed deposits are also insured by deposit insurance schemes, providing an extra layer of protection for investors. This assurance of safety and stability makes fixed deposits an attractive option for risk-averse individuals seeking peace of mind with their investments.
#4: LIQUIDITY
While the funds are invested for a specific period, investors have the option to withdraw the deposit before the maturity date, although this may incur a penalty or result in a lower interest rate. This flexibility allows investors to access their funds in case of emergencies or unexpected financial needs, making fixed deposits a versatile investment option for individuals looking to balance security and liquidity.
#5: HIGH INTEREST RATES
Compared to regular savings accounts, FDs offer higher interest rates. This makes them an attractive investment option for those looking to earn higher returns. The exact interest rate varies depending on the bank and the tenure of the deposit. Generally, longer tenures attract higher interest rates. Senior citizens usually get an additional interest rate over the regular rates.
Ready to Invest in a Fixed Deposit? Take the First Step
If you are considering investing in fixed deposits, the first step is to research and compare the offerings of different banks and financial institutions. Look for institutions that offer competitive interest rates, flexible tenure options, and convenient terms and conditions.
Once you have identified a suitable institution, you can open a fixed deposit account either online or by visiting a branch in person. When opening a fixed deposit account, be sure to carefully read and understand the terms and conditions of the deposit, including the interest rate, tenure, and withdrawal options.
Consider your financial goals and liquidity needs when choosing the tenure of the deposit, and ensure that the interest rate offered meets your expectations. By making an informed decision and selecting a reputable institution, you can start investing in fixed deposits with confidence and peace of mind. Visit FrendlyLendr to start your hassle free fixed investment.