Tips on how to Invest in Fixed Deposits

Generally People like to invest in Fixed Deposits or FDs. It’s probably the most secured investment vehicle out there. Though returns or profit margins are less compared to other investment modes, it is still quite popular among investors. FDs offer a fixed rate of interest over a fixed period of time. Though the interest rate may vary from bank to bank, in order to expect higher returns, you need to stash more money in your Fixed Deposit Account. The advantages of fixed deposits are that these accounts offer guaranteed returns with zero-risk unless there’s a complete economic meltdown. The primary goal should be how to earn more profit on your money. Here are a few tips that you might consider while investing in FDs Short-term deposits: Any investment lesser than one year timeline falls under this bracket. Individuals with quick savings goal can opt for short-term deposits. Many investors don’t like to see their cash locked away for a long period of time. Short-term deposits can also be beneficial for investors who don’t like to keep their money locked up. Long-term deposits: Any investment above 12 months is considered as long-term deposit. Since the tenure is more, the profit rates are higher. Compared to short-term deposits, this is a more preferred and viable option. Interest Rates and Market Research: Different banks offer different interest rates. It’s better to do bit of research on the interest rates offered by banks before investing. Also, being aware of the market, where the cash rate stands, and where it will stand in the long and short run will help make your decision. Types of FDs banks offer: In Malaysia, conventional, guaranteed-retur Fixed Deposits, Islamic Fixed Deposits, and Foreign Currency Fixed Deposits are offered. Each of these fixed deposits have their own distinct characteristics. PIDM Protection Eligibility: In Malaysia, Perbadanan Insurans Deposit Malaysia or PIDM, a Government agency, protects depositors if a bank fails to repay the depositors on their insured deposits. Make sure that your investment is eligible for this protection. The protection extends to a limit of RM250,000 per depositor per bank. In any case, if you exceed the limit then no need to worry. In such a situation, if you have to split the sum under different accounts. Overdraft Option: In case of an emergency, you can withdraw cash through an overdraft that will work as a security against your FD. Partial Withdrawals: Opt for partial withdrawals only if there’s an emergency. Banks usually levy a penalty fee on premature withdrawals. FD Charges and Fees: Malaysian banks usually don’t levy such charges. However, it is advised to check with your bank before signing the papers. Note: In this article tips are given to Asia-Pacific Region user's. In coming articles i'm going to write for North & South American user's wait till then.