Fixed Investment (FD)
Fixed deposits are investment instruments offered by banks and non-banking financial companies, where you can deposit money for a higher rate of interest than savings accounts. You can deposit a lump sum of money in fixed deposits for a specific period, ranging from 7 days to 10 years..
In India, Fixed Deposits are one of the most popular ways to save money. They are a safe investment, offer good returns, and are easy to open.The interest rate varies between 4 and 8.25 percent..
Key Highlights
Fixed deposit is a financial instrument that pays a fixed rate of interest until a given maturity date.
- Get Guaranteed Returns. ...
- Determine Your Tenure. ...
- Choose the Mode of Interest Payment. ...
- Better Interest Rates for Senior Citizens. ...
- Avail a Loan Against Fixed Deposit. ...
- Deal with Urgent Cash Crunch Situations.
The biggest risk that fixed deposits face is the interest rate risk i.e. the risk of your money being locked up for a long tenure at a low rate of return. To overcome this, 'ladder' your investments or split the amount available for investment in FD's into smaller amounts, each at different tenures.
As the risk involved in company FD's are much more as compared to bank FD's, the interest rates are generally higher. ... If a company FD has a rating of AAA, it means that it is a safe and secure investment. However, tread with caution if the rating is lower as there could be numerous risks involved.