The process of opening a fix deposit varies from one bank to another. It is a very simple process. The first thing to do is to fill a deposit form for those who do not have a regular savings account. Also you have to determine how much you want to place on the fix deposit.
Some commercial banks will require you to fill a reference forms so as to enable you to deposit a third party cheque.
Requirements:
- In some banks, you would also need to fill-in reference forms so you can deposit cheques issued by third parties.
- Passport photograph
- Proof of identification,
- A copy of recent receipt from any public utilities
- For foreigners, a copy of their residence permit or work of the account is required.
For those that already have existing account(s) with the bank, you need to just fill-in a form stating the following: account name, account number, deposit amount, duration of deposit.
Fixed deposit have it's own Merits and demerits:
MERITS:
It offers guaranteed return because there are very low risks and uncertainties as compared to investment in stock market.
They are very flexible and convenient in nature because one can have fixed deposit with maturity for 1 month or 1 year with any amount unlike real estate where one needs to invest heavily.
Investing in a fixed deposit account earns you a higher interest rate than leaving your money in a savings account as FD’s interest rates are highly negotiable.
It is easy to raise a loan against your FD. One can borrow up to 90 per cent of the FD’s amount.
DEMERIT:
They may not necessarily be suitable for everyone.
Its returns are low compared to other investment options and if the inflation is very high fixed deposit investors are the worst hit as the return from fixed deposit may not be sufficient to cover the high expenses due to inflation.
Also, If one invests all of his or her money in fixed deposits, he or she may not enjoy the benefits of diversification which one get if one invests the money in stock market, real estate, gold and other alternate investments.
As far as taxation is concerned fixed deposits are taxed at normal rates of taxation and hence one cannot take the tax benefit from this investment, unlike the infrastructure bonds.
We will continue from there next time.....
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