tax saving fd. In the cumulative option, the interest earned is added to the principal amount, and the investor receives a lump sum at maturity. In contrast, in the non-cumulative option, the investor can choose to receive the interest earned monthly, quarterly, half-yearly, or annually during the lock-in period.
Upon maturity, the investor receives the principal amount. Tax saver FDs can be a part of the overall financial plan of an investor. However, it is essential to keep in mind that the interest earned on tax saver FDs is taxable.
Hence, investors must calculate the tax liability accordingly and account for it in their overall financial plan. It is also essential to consider other investment options that provide tax-saving benefits like Equity-linked Savings Scheme (ELSS), Public Provident Fund (PPF), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY), and Unit-Linked Insurance Plan (ULIP). Investors can consider diversifying their portfolio across various tax-saving investment options to reduce their risk exposure.
In conclusion, tax saver FDs are a practical investment option for individuals looking to save on taxes. These FDs offer a fixed return, and the investment is also secure. With the help of an FD interest calculator, investors can calculate the exact amount they can save on taxes and plan their financial goals accordingly.
However, investors must keep in mind that they must assess all the pros and cons of trading in the Indian financial market before investing in any financial instrument. A tax saver FD is an ideal investment option for investors looking to save on taxes. These FDs have a specific lock-in period of five years, and the interest earned on them is taxable.
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