Behavioural biases that damage your investments!
In matters of investment, the sooner you acknowledge your mistakes, the sooner you'll find help in getting out of the soup. To break free from biases, the first step should be to identify those biases, says, Balwant Jain, Tax and Investment Expert.
Fixed deposit (FD) is one of the safest investment options that offers a fixed return more or less above the average consumer price index-based inflation.
For taxpayers tax-saving fixed deposits is one of the best schemes which is safe and also offers good returns. The interest rates vary from bank to bank. Now banks are offering up to 7.75% interest rate on 5 years tax-saving fixed deposits for senior citizens.
Features
Tax-saving FDs come with a lock-in period of five years and more.
A person cannot withdraw the money from the FD before the lock-in period in case of any emergency.
Loans against tax-saving fixed deposits are not allowed.
The interest on FDs will be paid monthly, quarterly, or annually or cumulatively.
Investments made for five years are tax-exempt under Section 80C of the Income Tax Act.
The interest earned from a tax-saving FD is taxable. The interest is added to the annual income and is taxable according to the tax bracket.
Interest rates
The interest rates on tax-saving fixed deposit varies from bank to bank. In recent weeks some banks revised interest rates on FDs. Take a look at interest rates which banks are offering to senior citizens:
Suryoday Small Finance Bank is offering the highest interest of 7.75% on 5 years tax-saving fixed deposits to senior citizens.
Utkarsh Small Finance Bank and Ujjivan, both small finance banks, are jointly in the second position in the list. They offer 7.25% interest to seniors.
The interest rates offering by RBL Bank on tax-saving fixed deposit to senior citizens is 7.10%.
AU Small Finance Bank and Jana Small Finance Bank offer 7.00%.
SFBs
Small finance banks are a special category of banks that have been created for offering banking services to the bottom-of-the-pyramid. They follow the same compliance norms like regular commercial banks are supervised the Reserve Bank of India.
There are about 10 small finance banks in the country, four of which are listed in the stock markets.
These banks have been set up in the past six years.