As an investor, one always wishes for the best possible
returns from his/her investments without any risk of losing money. However, it
is common sense that there is no such investment product. In reality, risk and
returns are inversely related, i.e. with more risk come higher returns and vice
versa. For an investor chasing long-term goals, it is important to make the
best use of available investment options. Both fixed-income and equity-linked
investments have a role to plan in the process of wealth creation. While
equity-linked investments help in the process to generate high real return, the
fixed income investments help in preserving the accumulated wealth so as to
meet the desired goal. If, investors need more from their FD then “FD Xtra” by
ICICI Bank is a good option for investors.
Now coming to the point, what is extra in it or say the
benefits. .. The Bank has introduced FD Xtra, a variety of new term deposits that includes three amazing
features in them – free term life insurance with fixed deposit, fixed deposits
with auto-investment in mutual fund SIPs and an option to take the maturity
amount in installments.
Now
let’s discuss it in details!!
My first point, which will be applicable for all the FD
investor is the TDS limit. The traditional bank fixed deposit is now getting a
makeover and its credit goes to Interim Budget 2019, wherein the TDS limit has
been proposed to be hiked from Rs.10000 to Rs.40000 a year.
My
second point will tell you about ‘FD Life’. It offers investors, who are 18-50
years of age, the dual benefit of investment growth via FD and security through
a free term life insurance of one year for the FD holder. It offers you the
benefit of a free term life insurance from ICICI Prudential Life Insurance
Company of Rs. 3 lakh on opening an FD of at least Rs. 3 lakh for a minimum tenure
of two years. In addition to getting a competitive interest rate, the customer
gets a complimentary insurance cover for one year. The customer has the option
to renew it next year. For more information watch the video:
My
third point will tell you about the ‘FD Invest’, which will help investors to
invest the interest earned on FDs in monthly Systematic Investment Plans (SIPs)
of a mutual fund of their choice from ICICI Prudential Asset Management
Company. Available with a FD of at least Rs 2 lakh for a minimum tenure of one
year, ‘FD Invest’ safeguards principal amount. At the same time, it offers an
opportunity to investors to invest in mutual fund through the interest
generated by the FD. For more clarity, check the below illustration:
Important: At present according to my comparative study, FD
interest rate on ICICI Bank for the duration of 2-3 years is 7.5% per annum. But,
to increase the return you can take more risk, you can choose equity linked
mutual funds through ‘FD Invest’ option. In the past, people have received more
than 15% CAGR by investing in various mutual fund schemes. But one thing you
should keep in mind that your MF investment horizon should be big like 15
years, 25 years etc. In short the combination of both is important for good
consistent returns in long run.
My
fourth point will tell you about the ‘FD Income’. Which is available in the form of FDs and
RDs, they offer investors the flexibility of receiving their maturity proceeds
in the way that suits their goals. Recurring
Deposit also helps you to inculcate the habit of regular savings. Investors
can choose to receive the entire maturity amount as a monthly income for the
tenure of their own choice. Alternatively, they can choose to receive 30% of
the amount as lump sum on maturity of the investment and the remaining 70% as a
monthly income for the tenure of their choice. Maximum tenure for all term
deposits, including investment phase and payout phase, is 10 years. For more understanding, watch the video:
My fifth and
last point is instant platinum credit card, in which you can get credit against
FD without any joining or annual fees.
Should you invest
in a “FD Xtra”
After analyzing the facts, I would suggest you invest in them, because the interest rate on
FDs are higher than that on savings account. During emergencies, you can use credit facility
available against your FD. If you invest your money in a fixed deposit account,
you will get an assured return. You will earn interest on your deposited
amount, but the rate of interest depends on the tenure you have chosen.
Financial instruments such as mutual funds, gold, shares etc., may provide high
returns, but are also risky. To manage this kind of risk, it becomes very
important to invest in debt instruments. It is a very safe form of investment where
returns are guaranteed. Fixed deposit investments can be made for different
tenures. For instance, if you have Rs.5 lakh, split the amount in five deposits
of Rs.1 lakh each for one, two, three, four and five years. When the one year
deposit is matured, reinvest it for a different tenure depending on new
interest rates. This will balance out the highs and lows in the interest over a
period of time. It will also ensure liquidity as you have deposits maturing at
different times. Make sure that you choose the right tenure as you also have to
consider the lock-in period and if you are withdrawing the amount before its
tenure, then the returns are lower. I would
also suggest investors, when you look at investments, invest with a longer time
frame. You benefit from compounding, where the maturity is higher over a period
of say 7 to 10 years, as compared to 1 or 2 years.
To apply for ‘FD Xtra’ deposits, customers can avail more
details here or visit their nearest ICICI Bank branch. Additionally, they
can apply for ‘FD Income’ through internet banking. To know more on latest FD Interest
rates, visit www.icicibank.com/interest-rates.page
Few days back, I have also opened a The One Saving
Account with ICICI Bank and started availing the feature of Privilege banking,
which is amazing. The minimum monthly average balance is Rs.100,000 and you
will get a lot of benefits like Personal Banker, Discount on purchases at
BigBasket, Free Health Check-up at SRL Diagnostics, Brokerage Waiver up to
Rs.22,500 on DMAT Account etc.
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