What is Fixed Deposit (FD)?
A fixed deposit is a type of term deposit that is made by the investor for a fixed time period at applicable FD interest rates and generates interest income. FD investment scheme is considered to be one of the safest modes of investment for any investor who has a preferred low-risk appetite. Under FD, an investor invests a lump sum amount and the principal gets locked up for a fixed period of time. On the maturity of a certain time period, the investor gets the principal along with interest income. The time period for FD investment can either be days or can be a number of years. The interest rate on FD depends upon the years invested and is decided by the financial institution accepting FD and even RBI regularises FD interest rates.
The main USP of FD is that the interest rate remains unaffected due to market uncertainty and delivers guaranteed returns. FD investment scheme is an important instrument in India, where the majority of people deposit in FD with the view of safety and low-risk effect on their principal investment.FD delivers around 3% to 7% interest in some cases and provides special interest rates to senior citizens which is one of the reasons why FD is famous among elderly investors.
Geeky Takeaways:
- FD is a type of term deposit that is provided by all scheduled banks, NBFC, and HFC and is regularised by RBI.
- Investment is made for a fixed period of time and the interest rates in FD are constant throughout the invested tenure.
- FD is considered to be the safest form of investment as market volatility doesn’t affect the interest rate and there is no risk of losing the principal amount.
- Senior citizens can avail of special interest rates which are available to them.
Table of Content
- Who Offers Fixed Deposits?
- Features of Fixed Deposits
- How to Invest in FD?
- Benefits of Fixed Deposits
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