Fixed Deposits Explained: An Age-old Investment Option

Fixed deposits are one of the most time-tested investment options that could offer a safe place to grow your money. In this video, we’ll explore how FDs could be a reliable choice for both short-term and long-term goals.

We’ll start by explaining the basics of FDs. How they allow you to invest a fixed amount for a set period in return for guaranteed interest. Fixed Deposits could offer a higher interest rate than regular savings accounts. They could also provide options for cumulative or non-cumulative interest pay-outs that might provide flexibility to suit different financial needs. They could be considered if you’re seeking low-risk, steady returns.

We’ll also cover the range of FD tenures, from a few months to several years. We’ll talk you through how to select one based on your financial goals. Additionally, we’ll discuss tax-saving FDs, which may offer deductions on your principal investment. This might add a tax-efficient edge to your portfolio.

By the end of this video, you might be able to understand why FDs remain a classic choice for growing wealth. Whether you’re saving for a rainy day or looking for a reliable way to earn interest, fixed deposits could be a rewarding option.

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Key Takeaways

Fixed Deposits or FDs are a type of investment option that might help grow your savings steadily

By placing a set amount for a specific timeframe, FDs could provide predictable returns at the end of the term

FDs usually offer better interest rates compared to standard savings accounts that could potentially increase your earnings

You might have a choice between accumulating interest until maturity or receiving it periodically, allowing for flexibility

FDs are generally low-risk investments, which could make them suitable if you’re looking for consistent, stable returns

With durations ranging from a few months to several years, FDs could support both short-term needs and long-term plans

Certain FDs come with tax-saving benefits, which may help reduce tax liability and add efficiency to your investment strategy

Be it for emergency savings or dependable income, FDs could serve as a dependable option for financial growth

Frequently Asked Questions
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Fixed Deposits typically offer higher interest rates compared to regular savings accounts. This could mean greater earnings over time. Savings accounts generally don’t provide any tax benefits, whereas tax-saving FDs, may allow you to claim deductions under the Income Tax Act.
The interest rate for FDs is locked in at the beginning of the tenure and remains stable, regardless of market fluctuations. This predictability could make FDs a secure choice. This is because you could continue to earn consistent returns on your investment without being affected by market volatility.
In a cumulative FD, your interest is compounded over the term and paid out only at maturity. This could lead to a larger total amount at the end. In contrast, a non-cumulative FD pays out interest on a regular basis, such as monthly, quarterly, or annually. This might offer a steady income stream during the tenure.
Fixed Deposits could offer flexibility in choosing the investment duration. This might allow you to match your tenure with specific financial goals. If you anticipate needing the funds soon, a shorter tenure may suit your needs. For longer-term objectives, selecting a longer tenure could potentially result in higher returns.
Investing in tax-saving FDs may provide deductions under Section 80C of the Income Tax Act. This could allow you to claim up to Rs.1.5 Lakhs annually on qualifying investments. This feature might make FDs a useful addition to a tax-efficient investment strategy, particularly if you’re looking to reduce taxable income.
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