In an age when expenses are mounting, and interest rates are constantly declining, your salary can seldom fulfill all your aspirations. Hence, you need a robust investment plan to provide you with ample funds for all your needs.
When a salaried professional thinks about investment, several options, such as fixed deposits, stock trading, mutual funds, PPF, MIS, etc., come into mind. However, if there is one instrument that gives you high returns, assured income, and flexible terms, it is a fixed deposit or FD. Finding the best FD plan is not that difficult if you know the right ways to choose one.
How Can the Best FD Plan Help You Make Money Above Your Salary?
The best-fixed deposit or FD plan not only offers you high-interest rates but also flexible investment terms. Here is how you can utilize the best FD plan to make more money than your salary.
1. Save Every Month
Budgeting is a skill that every intelligent salaried professional knows. If you want to fulfill your financial goals, it is important to create a budget and stick to it. Follow the ’40-40-20 rule’ to live life happily and take care of the future. According to the 40-40-20 rule, you need to keep 40% of your net income for everyday expenses. The other 40% you should invest in the best FD plan. The rest 20% you should keep in a liquid state for emergency expenses. Alternatively, you can invest in a short-duration fixed deposit with high rates of interest.
2. Set the Financial Goals
You can have three types of financial goals – short-term, medium-term, and long-term. For each goal, you need to decide the amount you require and when. For example, if you want to buy a car worth INR 10 lakh after six years, you will need to save at least INR 1.9 lakh every year for the next five years. If, however, your fixed deposit interest rates are high, you can invest less and earn more. However, while choosing the best FD plan, you also need to factor in the inflation rate and select an FD that gives you inflation-beating returns. PNB Housing, for instance, offers a yield to maturity of up to 9.13% and is often regarded as the best FD plan for salaried professionals.
3. Choose the Right FD
Fixed deposits are available in various shapes and sizes. If you want to get income regularly, it is better to opt for a non-cumulative fixed deposit. You can choose one of four interest payment options – monthly, quarterly, half-yearly, or annually. In the monthly interest payout mode, the fixed deposit interest rates are usually the lowest. The next type of FD account that you may invest in is a cumulative fixed deposit, where the amount remains locked in until maturity. You can choose a term between one year and ten years. Before choosing the best FD plan, ensure that the interest rates are above the inflation figure.
Conclusion
If you are new to savings and want to increase your salary without requesting your employer, the best way is by investing in the best FD plan. Also, look at the tax aspect while choosing the best FD plan. Corporate financial institutions like PNB Housing do not deduct TDS on interest income below INR 5,000. Hence, you may choose such corporate fixed deposits to earn higher interest rates.
