Mistakes You Should Avoid While Investing in Fixed Deposits

No doubt FDs are considered as the safest investment due to high returns as compared to savings bank account. However, investing money into something is not a low hanging fruit because the probability of mistakes always exists. So, it is important for you to understand the mistakes investors often make while investing money in fixed deposits.

This post highlights some of the main mistakes that every investor should avoid. Let’s have a look at them.

Investing All Money into One Scheme

Never put all your money into a specific scheme because experts see it as a bad idea, and suggest investing in multiple banks. One big benefit of splitting money to different banks is you won’t have to pay for premature withdrawal penalty for your entire investment.

Ignoring to Ladder Your Investment

Splitting money into different banks is a good idea, but is not sufficient to assure a successful investment. You are still at the risk of locking in your hard-earned investment over a long period of low interest rates. The only solution to this problem is laddering. For this, you should divide your investments in various tenures.

Ignoring NBFCs and Co-operative Societies

Many investors do not look beyond banks. The fact is there are a number of private companies including NBFCs and co-operative societies that offer lucrative FDs schemes as well. Many of them offer significantly higher interest rates. However, it is advised to ensure the reputation, financial status, and business prospectus is all acceptable.

Not Planning Tenure Properly

It is crucial because premature withdrawals mean lower returns as a result of premature withdrawal penalty. Therefore, it is advised to plan ahead in case of withdrawals. Prefer not to go for the longer tenure unless you are confident that you can avoid premature withdrawals.

Avoid these pitfalls to prevent your hard-earned money going down the drain. For more details, visit https://www.policybazaar.com/axis-bank-fd-rates/