Online Financial Tips

Archive for the ‘Fixed Deposit Accounts & Certificates’ Category

Certificate of deposit or also know as CD is a time deposit, financial goods that are offered by credit unions, savings institutions and banks to the consumers. Certificate of deposits are virtually free of risk as they are similar to the savings account as they are insured. Howsoever they are bit different from the savings account as they are fixed for specific period of time (that can be from three months even five years i.e. user specific) and of fixed rate of interest. It is anticipated that CD is to be held by the customer until is matured and only then it can be with drawled from bank with the given rate of interest. They are also called a fixed deposit which is made in banks. This is a way of collecting money by the banks from its customers for the purpose of lending. This brings money in the market and it helps increase liquidity in the market which makes it an integral part of the market.

In this exchange of keeping the money in deposit section on an agreed term, banks pay us the interest but the question where do they get the money to pay interest, the answer is simple they collect the money from customers and lend this money as loans at higher interest rates to firms and people. Usually there are fixed rates in CD but banks also offer variable rate. Other than local banks CD are also offered by the independent sales person and also brokerage firms to the investors that are going for safer investments. These sales persons are called deposit brokers. Mainly these brokers offer higher interest rate on CD by assuring to get specific amount to the institution.

However early withdrawals i.e. before CD is matured as a rule are subjected to considerable penalty. These penalties make sure that the investor’s best interest is not to withdraw its money until it is of utmost importance. Usually banks mail notice to the investor that its CD matures shortly and further directions are required. Notice mainly offers the principal amount along with the rate of interest or rolling it over i.e. depositing the total amount into another CD. Generally there is a given time after the CD has been matured that the CD holder can collect the cash without paying any penalty. The more the duration of the deposit, the more interest it fetches.

Independence is something that we all seek, right from the time when we are children. Of course, at that age, independence is generally associated with things like the freedom to choose our friends and the kinds of games that we play. However, as we become older, we begin to associate independence with other things. It is at this time that independence and money begin to become interlinked.

As we start earning our own livelihoods, we come to realize that we need to make our money grow. So we look forward to either investing our money in stocks and shares or depositing it in a bank. There is great joy to be gained in watching the money grow in multiple folds every year.

It is for the same reason that we listen to the advice of friends and family members when we have to open an account. Most often, we choose to open an account with a leading bank which offers various services. However, we should remember that these services do not come for free. As a result, we should look out for banks that charge the lowest rates for these services. For instance, a number of banks charge an additional fee if we ask for things like locker facilities or a greater number of check books. However, this may not be the case with all banks. In fact, several banks willingly offer the same services at no extra cost.

It is always better to open an account in no more than one or two banks. You might be tempted to go and get a few more bank accounts, but this is not recommended. What happens if you do this is that you lose track of your finances. This takes place especially if you are in the habit of operating all the accounts simultaneously. As a result, the savings in each diminishes at the same time. This is not a healthy way to operate a bank account. These days most bank accounts have the ATM facility; so we can draw cash in case of emergency.

Before opening an account with a bank, we must think hard about whether it is going to be useful or not. If we are working on a project and our client has an account with a particular bank, it makes sense to have an account there. This will enable the client to transfer funds to you immediately through that account. If there is no such purpose, you would only be locking up your funds in an account that you will not be operating.

Some banks also have the facility of automatically transferring your funds into a fixed deposit if you have not operated the account over a long period of time. This means that you earn more on the money in that account. In such a case, you would have made a good choice.

Bank accounts must be monitored on a regularly basis. Some banks charge a fee if the account is not operated every so often. Such minor details which we might oversee will have to be considered while opening an account.

There are some fantastic no-frills banking institutions in Australia and they offer many of the same services and features of the big banks, but without many of the fees and charges.

Features Of No Frills Banking

The features that your accounts will have vary from bank to bank. Thorough research will have to be done so that you can choose the best bank account for you. However, there are some standard features that you should look out for.

Not all banks classify these easy bank accounts as no frills banking, but it does not mean that the bank you are interested in does not offer such an option. The most basic no-frills features include the following:

• Access to a debit card
• No minimum balance
• A certain number of free banking transactions per month
• Accessibility to phone and internet banking
• Free cheques and cheque depositing at a branch

Requirements For No-Frills Banking

The requirements to open up a no-frills bank account may depend on the provider you choose. However, the normal requirements include being an Australian citizen or resident and having the stipulated minimum opening balance.

Once you’re approved, you will be able to enjoy all of the benefits that this sort of banking account has to offer you.

Fixed Term Deposit Accounts

Another banking feature that you should look for is a fixed term deposit account, especially if you want to save for a house, car or even a rainy day. This type of account can almost be treated with a “set and forget” type mentality – once you open the account, stipulate the time period and the amount you want to deposit, however you cannot access it until the account has matured (penalties may apply to break a fixed term deposit before it matures).

A term deposit account will offer you a high interest rate. There are usually no fees charged on a term deposit and the time periods that are available range anywhere from 1 month to 2 years.

A lot of banks are available in Singapore which has a lot of investment options for the investors. HSBC is one of the best banks in Singapore. One of the famous investment options available in HSBC Singapore is “Time Deposit”. You get good interest rates as returns for investing in this type of investment.

There are lot of HSBC Branches in Singapore. Some of the branches are listed below. You can visit any of the nearest branches to invest in fixed deposit.

HSBC Tampines Branch, Singapore. HSBC Serangoon Garden Branch, Singapore. HSBC Premier Centre, Tanglin Road, Singapore. HSBC Orchard Dhoby Ghaut Branch, Singapore.

The latest details of the branches are available in the bank website.

Time Deposit Rates:

Some of the latest interest rates in HSBC Singapore (as on July, 2010) are available here. You have to check the latest rates from the bank website or related websites before investing.

Duration: 6 months

Amount: S$ 50,000 to S$ 99,999

Rate: 0.25%

Duration: 12 months

Amount: S$ 50,000 to S$ 99,999

Rate: 0.48%

If you know the latest fixed deposit rates, then you can compare it with the other banks and analyze the best. This would help you to earn more returns for your investments. Most of the banks renew the time deposit automatically when it expires. The minimum deposit amount required to open this time deposit account is S$ 5000.

Next Step: Find the latest interest rates for the deposits offered by HSBC Singapore.

Financial planning means managing your income, expenditure and savings in such a manner that you never feel financially insecure during the ups and downs in your life.

It must be noted that we roughly remain dependent upon our parents during the first quarter of our life and almost become inactive in the last quarter after we retire from active life. So we are left with the middle half of our life to earn to make our living as well as save the money for our retirement days.

Does it mean that we should set some money aside in our lockers or in our saving bank accounts so we can take it out to spend it when we are old? The answer is no. For one, the total amount of our savings will start depleting the moment we start pulling out a part of it for our day to day living.

Again, by the time we retire, the purchasing power of the money may deplete substantially due to the inevitable and continuous process of inflation. Inflation or depreciation in the purchasing power of money is a harsh economic reality that cannot be avoided. It is a historical fact. It is as true that we all become old and our biological powers deteriorate with the passage of time.

Inflation means that while one dollar may buy you one liter of milk in the present times, it may just buy half a liter after you retire. Alternately, you may require two dollars to meet your requirement of one liter of milk.

How do you face this situation especially when you are old and cannot earn?

This is where the financial planning comes in. Financial planning helps you to manage your savings in such a way that you continue getting sufficient supply of money throughout your life especially when you are too old to earn. This can be done only by investing your money so that that it continues to grow and multiply and nullify the effects of inflation.

So, the earlier you start planning in your life for your future, the better. The truth is that you should start your financial planning for your future as soon as you start earning money.

This can be done by saving certain amount of your earnings for investment in such avenues which yield the maximum returns. There are numerous investment options and each one appears more alluring than the other.

But you must go for the investment option that suits your personal financial circumstances.

Some of the popular investment options are putting your money in fixed deposit accounts, mutual funds or stocks and shares also called equities.

While deciding upon any option, you must aim at getting maximum returns on your investment with minimum risks of losses.

The first option is to invest your savings in fixed securities because they offer assured returns without any risks. But since there are absolutely no risks in fixed deposits, therefore, the returns too are not really high enough to meet the contingencies of inflation in the distant future.

The second option is mutual funds. The mutual fund managers invest your money according to their discretion and charge you high fund management fees without guaranteeing you any specific returns. They warn you even before you invest with them that your investment is always at risk. Most of your funds are invested in risky equities and above all you do not have any control over the avenues of investment.

Investment in stocks and shares or equities brings in the maximum returns. But you may be warned of the attendant risks of losses as well.

It is heartening to learn that you can derive the benefit of earning the highest returns from investment in equities without facing the attendant risks.

For this you first need to open an account with a brokerage firm. It takes only a few minutes to open an account. Your broker will offer you numerous investment options in equities such ETFs DRIPS, fractional investment plans, scheduled investment plans, various retirement plans with tax saving options and much more which yield assured higher returns over a period of time. The whole process of investment and making profits is made automatic and hassle free. You only need to study the website of your broker and contact their customer services in case you have any doubts.

If you are an NRI wanting to earn income in India, you must open an NRE, FCNR or NRO accounts. These accounts will help you even in case of applying for NRI loans. You can enjoy tax exemptions on FCNR account as it is held on a repatriable basis with zero tax liability and high returns on interest rate. Enjoy tax exemptions, enroll for a pension plan, tax saving fund, insurance policies, Fixed Certificates, loans etc.

All income earned in India is repatriable now. Be it rental income, interest earned on savings account or fixed deposit, profits on shares, debentures and mutual funds are transferred abroad. Boost your financial health by investing in debentures, mutual funds and PSEs. RBI has made possible investment in India while you stay abroad. You can continue to earn your income and make profits in India being an NRI. You are allowed to invest in Indian mutual funds, shares, debentures and other certificates, except for a few certification which is not open to a non resident Indian.

Good news is that, you can save your income from being deducted in the form of tax. In order to enjoy tax free income, invest in insurance policies, pension plan, certificate of deposits and tax saving fund. Protect your family while you enjoy tax benefits simultaneously. If you are planning to invest in shares then you must have an online trading account too. Besides this, Non resident external account and Foreign currency non resident account should also be held to carry out financial transactions in five different currencies. You can freely have your financial transactions in US dollar, Deutsche Mark, Pound Sterling, Euro and Japanese Yen.

Except for Kisan Vikas Patra and other national savings certification, you can invest in all major certificate deposit schemes, company deposits, bank deposits and tax saver funds. Enjoy zero tax liability on your FCNR account and NRE account.