Investing your funds can be the best way to earn some profit. Many people prefer going for investing their funds. One can invest its surplus income which may either be a business profit or some extra income coming from salary hike or old age pension. Saving your surplus income won’t benefit you as much as investing it can.

Investments always help you get that little extra profit by replicating your funds. There are many options where one can invest its funds. You can either go for investing in mutual funds, shares, gold or can invest in fixed deposits.

Some investments do involve risk but they benefit you with much higher profit. Investments like mutual funds, shares, gold involve risk in them. One should only go for investing in these when you want higher returns on your investments and are also ready to take higher risk. These investments depend upon the market conditions. As the market conditions keep on fluctuating the investments become riskier.

The interest rate offered on these investments are higher as they depend upon the market condition. If the market condition goes down there is a possibility that you may face loss. Fixed deposits, on the other hand, are considered much safer compared to the mutual funds and shares. Investing in fixed deposit can benefit you with higher returns as well as involve less risk.

Bank fixed deposits are the easiest way and a commonly preferred to save some funds in India. Fixed deposits are measured as a safer option as opposed to the stock market and mutual funds. Term deposits can be of two types: fixed deposits and recurring deposits.

Fixed deposits are a onetime investment option where you will devote all your funds at a single time. If you opt for recurring deposits, you will have to invest your funds regularly over a period of time. The procedure of the fixed deposit is very easy and it is considered extremely secure.

The rate of interest offered on fixed deposits is much higher compared to a savings account. Now interest rates on fixed deposits offered by banks differ. Some may offer you with high-interest rates whereas some may offer you with low-interest rates. Interest rates mostly depend upon the tenure of your investment as well as the amount you are investing. Investing a huge sum can benefit you with high-interest rate and vice versa.

Having a high-interest rate on your investment would help you build wealth. You can also go for reinvesting your funds which can help you save some tax as well as it may also increase your interest rate in future.

Now banks charge you tax when they offer you with interest rate which is above INR 10,000. In such a case you should go for splitting your lump sum amount before investing it. This can benefit you with more returns as well as save you from taxation.

Also investing in fixed deposits benefits you with an insurance worth INR 1 lakh. Banks provide with such insurance as they want to win the customer’s trust. This also helps them build a good relationship with their customers.

One can also go for NBFCs fixed deposits as it offers you with a higher rate of interest as compared to banks. NBFCs offer you 2% more rate of interest than banks. Investing in NBFCs fixed deposits can be a little risk taking as they are not trustworthy as banks.

Thus, fixed deposits can help you build wealth as they involve less risk and offer high returns.