Fixed deposits (FDs) have been a popular investment option for those seeking security and assured returns for centuries. With its low-risk nature and many benefits, FDs continue to be a safe bet for both old and new investors. Following are five valid reasons to invest in Fixed deposits.
One of the finest aspects of FDs is that there is a fixed guarantee of returns. They are not linked to the market like some investments. Interest rates are set when you make an investment, and you’re sure of what you will get back at maturity. This is one of the main reasons FDs are best for conservative investors.
FDs are one of the most secure investment products, especially when invested in reputed banks or financial institutions. Your initial amount is safe, and there is a sure-shot return; hence, FDs are a risk-free bet to get your money back. Apart from this, deposits of up to ₹5 lakh are insured by the Deposit Insurance and Credit Guarantee Corporation of India (DICGC), which provides an added sense of security.
FDs provide the benefit of flexibility in tenure choices, varying between 7 days and 10 years. This gives you the flexibility to opt for a tenure that suits your financial objective, either to accumulate funds for an urgent need or create a corpus for long-term purposes. You can also have cumulative or non-cumulative interest payouts as you prefer.
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Though FDs are to be left untouched until the maturity date, FDs also provide the facility of withdrawal before time if there is any need. Though a penalty is being paid, the facility is given so that your money is at hand when needed and as a buffer for need.
FDs can be utilized as collateral to take loans and hence are extremely convenient as a financial instrument. You can lend loans of anywhere between 70% and 90% of the deposit value at reasonable interest rates, and that will provide liquidity without diluting the strength of the deposit.
With safety, flexibility, and guaranteed returns, FDs are a judicious option to ensure a secure financial future. For saving funds for something or creating an emergency fund, FDs provide a sure shot to financial security.
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