Fixed deposits have long been a preferred option as a conservative investment strategy for the risk-averse investors. As a stable, risk-free investment tool that offers a fixed rate of return, FDs are favoured by those who prioritise safety of their capital over other considerations and are happy to earn a modest return on them. However, beyond the traditional role as a safe investment haven, FDs can also be harnessed to achieve both short-term and long-term financial objectives. Read on to get into the strategies for leveraging fixed deposits to meet your financial goals, whether immediate or distant.

Is a fixed deposit suitable for both short-term and long-term goals?

Fixed deposits are versatile instruments suitable for a wide range of financial goals. Their reliability and assured returns make them ideal for short-term objectives such as saving for a vacation, wedding, or down payment on a property. Moreover, for those with long-term aspirations like retirement planning or funding higher education, FDs provide a stable foundation upon which to build wealth steadily over time. Now, if you wish to open an FD but are looking for options that do not force you to link your savings account with it, look no further! IDFC FIRST Bank has recently launched its digital FD, a fixed deposit that you can open without needing to link it with an IDFC FIRST Bank savings account. You can open bank account via a smooth Aadhaar OTP-based journey

How to leverage FDs for short-term goals?

When utilising FDs for short-term goals, it's essential to focus on liquidity and flexibility. Opt for shorter tenures that align with the timeframe of your goal, ensuring that funds are available when needed. Additionally, consider laddering your FDs, dividing your investment across multiple deposits with staggered maturity dates. This strategy enhances liquidity while maintaining the benefits of fixed deposit returns. IDFC FIRST Bank fixed deposits can be beneficial in meeting your short-term goals as they offer flexible tenures as short as 7 days at attractive interest rates to meet your short-term investment goals without any risks.

How to invest in FDs for long-term goals?

For long-term objectives, such as retirement planning or wealth accumulation, capitalise on the power of compounding by selecting longer tenure FDs. While sacrificing some liquidity, longer term deposits typically offer higher interest rates, amplifying your returns over time. Moreover, consider reinvesting the interest earned to maximise compounding effects, steadily growing your wealth for the future. With IDFC FIRST Bank fixed deposits, you can conveniently plan your long-term goals as it offers extended tenures of up to 10 years along with quarterly/monthly interest payout. You can choose quarterly compounding interest rates for your long-term goals to enjoy the power of compounding for growing your funds exponentially over longer horizons.

Things to consider for long-term and short-term goals with fixed deposits

Whether aiming for short-term or long-term goals, it's crucial to assess your risk tolerance and investment horizon. For short-term goals, prioritise liquidity and stability, opting for shorter tenure FDs with easily accessible funds. On the other hand, for long-term goals, focus on maximising returns through longer tenure deposits, capitalising on power of compounding to bolster wealth accumulation over time.

Choosing a suitable fixed deposits for your long- and short- term goals is crucial. So, opt for a financial institution like IDFC FIRST Bank that not only provides flexible tenures, ranging between 7 days to 10 years, but also offers customisable interest payment options such as monthly/quarterly interest payouts to suit your investment goals. Do keep in mind that you can earn higher interest income on IDFC FIRST Bank fixed deposits depending on the FD’s tenure, so choose wisely. In addition, to meet your urgent financial requirements, you can use the overdraft facility without disturbing your deposits to stay aligned with your financial objectives.

Conclusion

Fixed deposits are a versatile financial tool capable of fulfilling both short-term and long-term objectives. You can plan your investment strategy with the help of fd calculator for a specific timeframe and as per the requirements of your goals, which can leverage the stability and reliability of your FDs to achieve financial success. Whether saving for a dream vacation or planning for retirement, a smart use of fixed deposits can pave the way towards realising your aspirations with confidence and security.

This is a sponsored article by ABP Digital Brand Studio.