Valentine's Day is in the air, with hopes of couples old and young to find the perfect match and live the perfect life together. However, to have a smooth transition from a couple to a family, financial security is the key. A number of factors determine your financial security–your income level, risk appetite, and the wealth you can create by investing your dual income smartly. As a couple, your expenses are limited to your daily needs and occasional holidays. However, when you decide to build a family, financial decisions become very significant and critical to your future goals.
Plan your investments in such a way that they have a certain percentage of security from market volatility, and you keep getting a fixed sum on maturity. If both the partners are working, you can still plan expenses on a long-term basis, but a single income will force you to sustain the investible surplus into a safer option.
How should couples compare fixed deposits with other options?
As per a basic bank statistic released by Reserve Bank of India recently, Indian banks had 57.7% of their term deposit into fixed deposits. Hence, for any new to experienced investor, fixed deposits remain an instrument of choice.
Here’s a look at how other investment avenues compare against fixed deposits.
- High-risk investments- Equity-oriented mutual funds and stocks fall in this category of investments. For couples, volatility should be the main reason for staying away from these high-risk options. When the market is buoyant, these can outperform any other asset class, but constant monitoring is a tough job for busy couples in today's hectic work culture. Hence, the fear of missing out on a rally or cutting the losses on time are some of the associated issues. If one of the spouses can monitor these investments, only then couples should invest in such high-risk options.
- Medium-risk investments: Debt, balanced mutual funds, and index funds fall in this category. Such instruments do have an element of debt and stability, but they have their volatility linked to the markets which can hamper your principal amount. The irregularity in earnings can make any fixed income from such investment impossible. As a couple, the safety and stability of your investments are of utmost importance. Investing in company FD like Bajaj Finance Fixed Deposit which is accredited by reputed third-party agencies like ICRA and CRISIL will help you earn high returns and also ensure the safety of your capital.
- Tax saving FDs also help you cover the tax saving ceiling under Section 80 C which both of you as a couple can use under your respective incomes while filing for Income Tax returns.
Benefits of investing in FDs for couples
There are many different benefits of investing in fixed deposits. Here’s a look at the top benefits:
- Earn regular income for expenses: You can earn regular and stable income with periodic interest payouts available in case of non-cumulative FDs. You can choose to receive monthly, quarterly, half-yearly or yearly interest payouts. Alternatively, you can go for the cumulative option where you can allow the interest component to be compounded and receive the entire amount together at maturity. The interest rate earned here is on the higher side.
- Balance risky investments in your portfolio: Most household portfolios should consist of a portion of fixed income investments and fixed deposits top the bill. Since the returns on fixed deposits are assured and efficient, they can be used to offset the risks of other volatile investments that are linked to the markets.
- Backup for unforeseen emergencies in the family: You can avail a loan against FD or go for premature withdrawal of the amount to meet liquidity needs in case of exigencies and unforeseen situations. Bajaj Finance considers premature withdrawal a necessity in utmost need and charges a low premature withdrawal fee.
- Ease of investing for working couples: With hectic lifestyles and both partners working actively, Bajaj Finance offers the facility of online account management, flexible tenors, and FD Interest rate calculator . You get assured returns and high-interest rates coupled with the ease and comfort of investing from your home.
How to create a corpus together?
You can create a corpus for your future by systematically investing in multiple FDs using the technique of laddering. Periodically investing in fixed deposits of any available amount will help you benefit from the averaging of changing FD interest rates. Alternatively, you can dedicate a fixed amount every year towards FD investments once you are done with mandatory tax planning investments.
This approach can help you plan for financial goals as a couple and as a family, as you will be assured of a constant income stream as well as a sizeable corpus which can be utilized for investing further.
Bank fixed deposits are currently offering interest rates of 5.5% to 7.5% depending upon the tenor. Longer tenors like five years will help you gain a maximum yield. Bajaj Finance is offering an interest rate of 8.75% for maximum tenors. You can also go for options like a special 15-month FD with Bajaj Finance FD which offers a 0.25% increased ROI than a regular 12-month fixed deposit.