(FD) are an easy way to invest in India with assured returns and less risk. But if you want to reap the most of your FD creations, you need to be strategic in understanding where your returns come from.  

How to earn higher returns on your Fixed Deposits  

1. Pick a longer tenure FD: Returns depend upon some key factors, and tenure is one of them in an investor’s mind. Usually, the longer the FD maturity, the more the FD interest rates will be. Compared to the short term, better yields could be enjoyed for a tenure of at least 3-5 years. But remember to choose a tenure that fits your financial goals and liquidity requirements.   

2. Select Cumulative Fixed Deposits: You could get interest on the interest with Cumulative FDs, meaning you are exploiting the magic of compound interest. Re-invest the interest you are paying into FD; eventually, your returns will boost rapidly and exponentially. Conduct an FD Comparison (Salaried person) to choose between Cumulative and Non-cumulative FDs.  

3. Laddered Fixed Deposits: Laddering is when you break up your deposits into several FDs with varying maturity times. This technique allows you to earn higher interest rates in FDs, while still having liquidity. You can invest periodically, and then the maturity proceeds at the new highest rates. 

4. Avoid premature withdrawal: Withdrawing funds from an FD prematurely incurs a penalty, resulting in lower returns. Banks will charge you a penalty of around 0.5%-1% on the interest rate if you opt for an early withdrawal on FDs. Be wise with your investments since FDs before maturity should not be broken except in rare cases. Also, plan well for how you are planning to maximise returns.  

5. Select a Tax-savings fixed deposit: Tax-saving FDs are locked in for 5 years concerning the tax benefits of section 80C in the Income Tax Act. You can claim a deduction up to the investment amount in these FDs, which means your post-tax returns are higher. Keep this in mind: premature withdrawals are one of the drawbacks of the Tax-Saver FDs.  

6. Invest in special FD schemes: Banks frequently put FD (Fixed Deposit) into special schemes with higher interest rates for different tenures or categories of customers. Pitch for these offers, especially in the festive season, and stay alert. If you are a senior citizen, the higher FD rates tuned to your needs can be convenient. Always compare the rates using an FD Calculator before you invest. 

Conclusion  

Maximising Fixed Deposit returns is all about planning and making wise decisions. You can fetch higher returns by picking the correct tenure, opting for cumulative FDs, and laddering your investments wisely. You can also try clamping post-dated cheques under some valid circumstances. You can also get tax benefits from investing in Tax-Saver FDs if you have an amount to spare. The fact is that in-depth investing and a little strategic thinking can make or break your FD calculus effectively, leading you to financial visibility.