People prefer Fixed Deposits because they are a low-risk investment. They provide high-interest rates on your money invested and are stable. Many investors get lure towards a fixed deposit.
Here are a few common mistakes you should avoid while investing in Fixed Deposits:-
Poor planning of Investment Goals
There is no use to invest in Fixed Deposits if you don’t have any investment goals. Here is the direction for the investment goal :
- Choose the right scheme according to your investment plan.
- Have a diverse investment portfolio by aligning with other saving plans.
- Capitalize your money on the specific benefit of Fixed Deposits, which include liquidity, flexible tenor, short-term gains, emergency funds, stability, etc. After this we optimize savings.
- Prior preparations for future expenses is made.
Having a prior investment goal is vital as it helps you to cleverly plan for the future and makes you select the right scheme. A right scheme specially designed for you will further help you get flexible tenure, high rates of interest, and hassle-free documentation.
Absence of relevant research
Before investing in any of the schemes, it is important to study the market and different interest rates. After the intensive study only, one should consider investing in the Fixed Deposits.
It also helps you to understand and choose the best scheme suitable according to your requirements.
Research helps to compare various schemes and different benefits provided by them. Investment guides and books are available to help you to study the same. For more and detailed information about different Fixed Deposit schemes, many financial institutions also provide information about the same on their website and newsletter.
One and SIngle Option
A single investment scheme is the most common scenario. This will decrease the opportunity to get a high amount of returns. One should always consider other options as well with a diversified portfolio. Most of the people prefer to invest in an FD. They should opt for different Fixed Deposits, each having different tenure periods. This will provide the benefit of both high returns and short-term gains.
Not maintaining proper records : A proper record of all details. This helps to resolve any arises that may occur in the future easily. Must note that , your passbook entries and bank statements, related to your Fixed Deposits should be one of your main concerns.
Non-consideration to inflation
Although inflation is the rise of rates of commodities and services, it impacts the value of money to a great extent. Before investing in any of the Fixed Deposits, it proves out to be important to plan and invest a sum that is likely to be valuable after the end of tenure.
There are many FD calculators available online to help you calculate the accurate returns on your investments after the end of the tenure, including inflation likely to be there in the future.
No investment in insurance policies
Usually, after investing in a Fixed Deposit, people feel safe and free from any risk for their future. They don’t invest money in insurance policies. It is vital to have an insurance policy apart from investments. Insurance helps you and your family in unforeseen events.
Therefore, in case of emergencies, you won’t have to break your Fixed Deposits. Also, the Insurance policy will provide enough backup for such situations.
Fixed Deposits are not always all good. They have some loopholes that are taken care of. These mistakes can harm you even more instead of benefiting. It is significant to make the right choice for your Fixed Deposits for a bright future. A combination of different schemes is also important as it helps you to face difficulties with backup and support.