How to Invest a Lump Sum of Money?

If you are looking to invest a large sum of your reserve cache of funds and wish to reap sound financial gains, investing in fixed deposits is an ideal investment opportunity.

For example, if you invest a sum of Rs. 1 Crore, the Rs. 1 Crore FD interest per month can vary from 3% to 6%, depending on the investment tenure. The interest pay-out is flexible when you invest in an FD – either monthly, quarterly, half-yearly or annually. Senior citizens investing in FDs can expect a slightly higher interest pay-out of 0.15% to 0.25%.

Types of FDs

There exist a multitude of FDs in the market. If you wish to invest in an FD, you may choose from the following:

• Cumulative Fixed Deposit: If you opt for this kind of FD, you will receive interest only at the time of maturity, and will not be eligible for interval-based interest payouts. The tenure for this FD ranges from 1 to 5 years and is mainly recommended for those not looking for regular interest payouts.
• Non-Cumulative Fixed Deposit: If you opt for this kind of FD, you will receive interest pay-outs at regular intervals of time. The tenure for this FD ranges from 1 to 5 years and is mainly recommended for those seeking a regular source of income in the form of routine interest payouts.
• Company Fixed Deposits: This form of FD is generally offered by NBFCs, often at a higher rate of interest. This FD is generally meant for companies that possess a good credit rating.
• Senior Citizen Fixed Deposits: This FD is meant specifically for senior citizens, i.e, those above the age of 60, and offers the dual benefit of higher interest rates, and flexible tenures.
• NRI Fixed Deposits: This FD has been created specifically for NRIs, OCIs, PIOs, and NROs, offering a much higher rate of interest as compared to traditional savings accounts. These FDs come with a fixed tenure and accept payment in the form of NEFT and RTGS payments from NRO bank accounts.

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Systematic Deposit Plans

A Systematic Deposit Plan amalgamates an FD and a Systematic Investment Plan (SIP). There exist two forms of Systematic Deposit Plans:

• Single Maturity Scheme: This scheme provides you with the option of receiving the maturity amount of all your FDs on a single day and can provide you with a lump-sum amount on maturity.
• Monthly Maturity Scheme: This scheme provides you with monthly maturity pay-outs, on your FDs.

Reasons for Investing in Fixed Deposits

• Reliability: Check for an FD that is certified by ICRA’s MAAA (stable) rating and CRISIL’s FAAA/Stable rating.
• Flexibility: FDs offer flexible tenures, ranging from 7 days to 60 months.
• Laddering: You can opt for laddering your FD to maximize your returns.
• Low Minimum Investment Amount: You can opt to invest in an FD with an amount as low as Rs. 1000.
• The convenience of Application: Many financial institutions offer online services; you can open an FD in a hassle-free online procedure.

Eligibility Criteria

If you wish to invest in an FD, you must (a) be at least 18 years of age, (b) an Indian citizen, and (c) can be a salaried individual, self-employed professional, non-professional, Hindu Undivided Family, sole proprietorship, partnership, or a company. 

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Conclusion

Investing in an FD is a safe, high return on investment method of parking your reserve cache of funds. If you happen to invest a sum of Rs. 1 Crore, your 1 Crore FD interest per month will reap high returns.