How to Invest in Fixed Deposits in Nigeria
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Fixed Deposit interest rate in nigeria is the amount of interest that a fixed deposit account earns each year.
Fixed deposits are an excellent way to save for retirement, but they also offer tax benefits and can be used as collateral for loans. The best thing about fixed deposit accounts is that you have complete control over how much money you want to put in them.
This means that if you need funds quickly, you don’t have to worry about waiting until your next paycheck before withdrawing any money from your savings account.
Can you make money by investing in Nigeria’s fixed deposit account?
The answer is yes and no. All fixed deposit accounts are not created equal. If you have a bank account in Nigeria with an average interest rate of 12% then the answer would be yes, but if this is your first time investing any money into Nigerian banks it may take some time before you start to see profits on your investment.
Banks in Nigeria offering fixed deposit accounts with higher interest rates will also require you to put more money into the account. This is because these banks are taking on more risk when they offer this type of account and need a bigger incentive for doing so.
Rates from bank to bank differ so it is important to do some research before deciding where to go.
Advantages of Fixed Deposit Accounts:
- Fixed Deposit account offers you the opportunity to “lock in” an interest rate on your investment for a certain period of time.
- The rate is higher than what you may get from a savings account.
- Deposit accounts offer security in that there is no risk of losing your investment to inflation.
- It’s also possible for people with low income to qualify for fixed deposit accounts, especially if they have enough money saved up and could afford the minimum amount required by banks.
- Fixed Deposit also offers an added sense of security and protection as the money you invested will not be lost because it’s insured under Nigerian law against bank insolvency.
- Fixed deposits can also have an attractive yield and payouts that depend on how much you invest, the duration and type of deposit account.
Disadvantages of Fixed Deposit Accounts:
- The higher the risk, the higher the return will have to be.
- The liquidity of fixed deposit accounts is lower than that of other investments, meaning the funds in your account can’t be withdrawn at any time.
- Fixed deposit rates are very low, and the rate of interest is always lower than what you can earn in other investment alternatives.
- Fixed deposit account rates are also usually set for a fixed term (three or six months), meaning that funds should be withdrawn before this date if they want to get the best returns on their money.
- It’s not recommended to invest in fixed deposit accounts if you are going to need your funds in the near future; this is because of their low liquidity.
Documents Required to Open Fixed Deposit Account:
- Copy of your valid ID card (National ID, Passport, Driver’s license)
- Passport photo (size 35mm X 45mm)
- Two passport photos (size 35 mm x 45 mm – one should be taken from the front and one from the side, with a plain background)
- Bank statements for last six months as proof of address.
How to Calculate Fixed Deposit Interest Rate
Fixed deposit interest rates are calculated by adding the nominal fixed deposit rate to a given percentage.
Banks to Open Fixed Deposit Account in Nigeria
Fixed deposit accounts are opened by banks in Nigeria. Almost all commercial banks in Nigeria are offering fixed deposit accounts. Fixed deposit interest rates in Nigeria are subject to change without notice.