5 Ways To Increase Return From Fixed Deposits

It is a time when interest rates on fixed deposits are not yielding very much. In fact, fixed deposits in government owned banks are yielding returns of just about 6 per cent. This is far lower than what investors were getting about 1-2 years back. It therefore becomes imperative to get the maximum out of your fixed deposits. Here are 5 ways to increase your returns from fixed deposits.

1. Look beyond bank deposits

Bank deposits tend to give you very low interest rates of 6 per cent. Therefore, you need to look beyond bank interest rates. For example, you might want to consider post office savings schemes or company deposits.

At the moment, a company deposit like KTDFC offers you an interest rate of 8 per cent. It is a Kerala government owned company and the deposits are guaranteed by the government of Kerala. Similarly, the Public Provident Fund can offer you an interest rate of 7.1 per cent.

We wish to inform readers that it is very important to ensure that before you invest, look for safety. Even a bank like Yes Bank faced issues and hence, safety is paramount before you invest. In the present context when even the best of NBFCs and banks are facing a challenge, one must be extremely careful. Look for safety above returns and go for only AAA rated deposits. Also, it is advisable to invest only for short term tenures, rather than very long term.

 

2. Look for yields and not interest rates

It is important that you look for yields and not interest rates. A bank that compounds interest rates every quarter or an institution that does that, pushes your yields higher. On the other hand one that compounds your interest every year, reduces your returns or overall yields.

3. Submit form 15g and 15h

It is extremely important to submit form 15g and 15h, if you are not liable to file your returns or if your income is below the threshold for paying income tax.

Form 15g and 15h is nothing but a declaration telling the institution that your overall income does not come under the threshold to pay income tax and hence not to cut TDS. However, it is important to note that this is only for people who do not have income of more than Rs 2.5 lakhs each year. Currently, it is Rs 2.5 lakhs.

 

4. Invest in parents or spouse name

In case an individual is paying taxes, it may not be a bad idea to invest in the name of the spouse to save on tax. This is only if the spouse does not have taxable income. This way one will prevent the interest being added to total income and being taxed, as this will reduce the overall yield.

5. Look for online mechanisms to invest

Some companies offer you higher returns when you invest online. Mahindra Finance offers you a slightly higher rate of returns when you invest online. There are processes where you can invest online, but, you need to complete all the KYC norms accordingly.