Travelling is a common desire for many, but the expenses make people put their desire under the carpet. The fear of uneven expenditure on additional activities like holidays restrains individuals from enjoying their dream vacation.
However, with some planning, an individual can set aside enough savings to use on desirable activities like vacations. Fixed deposits (FD) are a smart and planned way to invest your additional income or savings for such expenses.
Fixed deposits do not let your funds lie idle and help you earn reasonable interest returns. You can calculate your FD interest returns using a calculator for fixed deposit.
Reasons Why a Fixed Deposit is a Good Option to Plan a Vacation
Here is why a stable and secure investment like a fixed deposit is the best option to fund your vacation:
- Attractive interest returns: Banks’ interest rate on fixed deposit schemes are much higher when compared to other products, like savings accounts. Various banks offer different interest returns on a fixed deposit investment, and with the right bank, you can earn handsome returns, as high as 7.55% per annum, on your fixed deposit scheme. Further, banks compound FD interest annually. It significantly increases the returns you generate from your fixed deposit account.
- Guaranteed returns: Unlike other market-linked financial instruments, like shares and mutual funds, fixed deposit plans are not affected by the volatility of the market. The interest return on a fixed deposit scheme remains unchanged for the investment’s life. Factors like political or economic unrest do not affect it. Since the returns are fixed, the account holder can pre-determine his returns using a calculator for fixed deposits. By knowing the FD returns in advance, the depositor can plan the budget for his vacation accordingly.
- Flexible tenure: Fixed deposit schemes are available in flexible tenures for investors. The investor can choose to invest in a fixed deposit plan for 7 seven days to 20 years. If you plan to go on a vacation anytime soon, you can invest in a fixed deposit scheme of a shorter duration. If your travel plan is futuristic, you can invest for a longer time and earn higher returns.
- Flexible investment amount: Fixed deposit investments are flexible investment options in the true sense. You can not only decide the maturity period of your FD investment but also decide the amount of money you want to invest in it.
Investors can deposit a minimum amount of Rs.10,000 in a fixed deposit scheme, which can go up any amount they want. If you plan to make a short trip somewhere in the country, you can make a fixed deposit investment of a smaller amount. If you plan to travel longer or go on an international trip, you can invest a larger amount in your FD account.
- Instant access to funds: Generally, people start saving for their vacation at least one to two years before they go on a vacation. However, the dates of travel are decided much later, around the final time of the holiday. Therefore, the investment avenue you choose to park your funds for your travel plans should provide instant access to funds along with good returns. A fixed deposit account fits in perfectly here. Fixed deposits offer instant liquidity to the FD depositor. So if you suddenly plan a vacation, you can conveniently liquidate your FD investment and use the money for your trip.
- Security of money: Earning money takes a lot of hard work. No one wants to invest money in a scheme that is not safe. Fixed deposit investments are absolutely secure. FD schemes offered by banks are governed by the Reserve Bank of India, which gives them additional security cover.
You may also read – What is fixed deposit account
A memorable vacation requires excellent financial planning. A fixed deposit scheme helps you save money and earn handsome returns to help you have the desired funds for your travel plans.