Fixed Deposits Can Help You Plan Your Vacation

Time to read: 5 mins | January 5, 2019

A winter break is something that everyone looks forward to. Sip some cutting chai, coffee, enjoy scrumptious food, bonfires, and among other things plan a vacation around Christmas. The Christmassy spirit in the air elevates our desire to unwind and gear up for a holiday.

If you haven’t planned a holiday this year (for whatever reason, perhaps you weren’t financially ready), but intend to go on a holiday next Christmas, hurry and start planning for it right away!

For a financial goal such as a vacation, which is a year from now, making a sure-shot investment such as a bank Fixed Deposit (FD) will prove prudent. Here are few traits of a bank FD:

• Offers fixed and secured returns, unlike market-linked instruments
• Helps you address your liquidity needs (if the plan and tenure is thoughtfully selected)
• Helps you provide for your short-term as well as long-term financial goals
• Can also help you build a contingency fund

For these reasons bank FDs continue to be a sought after investment avenue in the world investment products. From an asset allocation and diversification standpoint, it is sensible to hold some money in FDs.

To plan for your next Christmas vacation with a bank FD steadily, regularly and systematically, consider Axis Bank recurring deposit (RD). 

Alternatively, if you wish to invest a lump sum, that is possible too. However, choose the ‘cumulative plan’ (also known as re-investment of interest plan) over ‘monthly interest payout’ or ‘quarterly interest payout’.

Under the re-investment of interest plan, the interest you earn is automatically re-invested in the principal amount at quarterly intervals, giving you a higher return. 

To maximise the return on the bank FD so that you meet your goal comfortably, the following is recommended:

• Lock-in when interest rates are attractive – To yield a better rate of return and even counter inflation, book a FD when interest rates are attractive. 
• Select your tenure and plan thoughtfully – Investing in line with your financial goals is imperative, whereby you have the money when you need it. So, in this case, if you’re planning for the next Christmas vacation, which is say 12months from now, consider investing in a 1-Year FD.
• Do not prematurely withdraw your fixed deposit – A premature withdrawal counteracts with the power of compounding. Hence, while you invest in a bank FD to plan your next Christmas vacation avoid premature withdrawals.

In case, if you need the money in between (for whatever reason) availing of a loan against your bank fixed deposit will be far more sensible than withdrawing from your FDs. To know more on loan against Axis Bank FD, click here.

Bank FDs must occupy an important place in your portfolio . This diversifies your portfolio and reduces the overall risk. Hence, bank FDs are a safe avenue to generate wealth and ensures your financial security.

Investments can be done online, i.e. through internet banking or mobile banking––—from the comfort of your home, office, or wherever you are–––or even by physically visiting the nearest bank branch.

Axis Bank’s Fixed Deposit provides easy transfers from your savings account to your FD.

Book your bank FD today and financially plan your next Christmas vacation!

Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.