Myths and facts of Fixed Deposits

  • Myth 1: Only banks offer fixed deposits. Fact 1: Fixed deposits are offered by companies too.
  • Myth 2: More number of regular interest payments, more the returns. Fact 2: A cumulative FD with returns only on maturity would fetch you more.
  • Myth 3: All 5 year deposits fetch you a tax benefit. Fact 3: Only select 5 year fixed deposits fetch you a tax benefit.
  • Myth 4: TDS on FD cannot be avoided, as it has to be paid by all. Fact 4: Providing necessary documents could help avoid TDS.
  • Myth 5: FD interest earned need not be declared in your tax returns. Fact 5: Income earned on FD should be included in annual tax returns.
  • Myth 6: Premature withdrawal is the only way if I need money mid way. Fact 6: FDs have other options in times of contingencies.
  • Myth 7: In the long term, fixed deposit offers better returns than the stock market. Fact 7: The effective returns from an FD are lower than stock market.
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