A fixed deposit is always considered as a safe mode of investment as it offers a guaranteed return. This notion can, however, be stretched further to maximise the return on investment. All you need is a well-formulated, pre-determined plan that can help you to earn extra, provided it is implemented effectively.
You must take some effective measures in order to maximise your return on fixed deposit. Using tools like a fixed deposit calculator can help you in getting a precise estimation of the money invested and the returns gained on it.
It's always a wise idea to do proper research before investing. First of all, go through the various fixed deposit schemes offered by different banks and companies. After you are done with this basic step, evaluate the interest rate and the maturity on investment by using an online fixed deposit calculator. Also, before investing, emphasise on the yields apart from the interest rate offered by the bank. Since the interest rate offered by the bank is compounded on a yearly basis, it is the yield that matters more than the interest rate. Having a preliminary idea of some of the financial elements will help you to make a better investment.
It is high time one comes out of the perception that only a bank can provide high benefits on making an investment in fixed deposits. Even opting for a corporate fixed deposit can fetch a higher return on your investment provided you research well before investing. Your goal is to obtain the optimum benefit and the highest return on your investment. To ensure this, you can compare the various fixed deposit schemes of both the corporate sector and bank. In most cases, you will find that investing in a corporate fixed deposit will give you 1 to 3% higher return over the bank. All of this can be easily forecasted using tools like a fixed deposit calculator.
Whether you opt for a corporate FD or a fixed FD, each lender offers an interest rate that differs from one another. So, it is wise to compare the interest rate offered by the various banks. You can use an online fixed deposit calculator as it will help in evaluating complex calculations and will make your life easier (math-wise). However, the primary step should be to give a thought on your requirement and then compare the various fixed deposit schemes as it will help you in making the right choice. For comparing interest rates, you can take certain factors under consideration like tenure of maturity, rate of interest on monthly, quarterly and yearly basis and the principal amount.
A cumulative fixed deposit is a type of term deposit scheme where your interest is re-invested with the main amount. During the time of maturity, you will receive the principal amount along with the total interest accumulated. The best thing about opting for a cumulative fixed deposit is that it fetches a higher return during the time of maturity. Though it doesn't provide a periodic return like the non-cumulative fixed deposit in terms of return on investment, cumulative FD will give you a higher return.
The best way to maximise your return on your investment is by splitting a lump-sum principal amount into smaller investment. For instance, if you want to invest Rs. 10 lakh, split the amount and invest into five different fixed deposit schemes. Keep re-investing in this fixed deposit schemes one after another for your desired tenure. Constructing this ladder of the fixed deposit will help you to balance out the highs and the lows in return on investment for over a period. You can also use a fixed deposit calculator to simplify the overall calculation.
Additionally, this will increase the liquidity of your investment as the deposit matures every year. This procedure is considered as one of the best processes for maximising return on investment and will help you in faster wealth creation. You can also consider the option of making an investment for a short term fixed deposit rather than opting for a long term scheme to beat inflation.
In order to make a productive investment, it is important to step ahead with a smarter approach. Consider some of the proven ways that are discussed above and maximise your return on investment. These will not only help you in strategising your investment but will also help you to sustain efficiently with the present market condition.