Should you Keep Cash or Invest in an FD during the Lockdown?

COVID-19 has changed all the investment games, and all we can do is stay put. The question that arises is should you keep liquid cash or invest in a saving instrument like bank fixed deposits. In such times, a mix and match of investments are what will offer you optimum results. Let’s discuss the same in this article.

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A fixed deposit offers a fixed and secured return on the principal amount. There is flexibility to withdraw the deposited money at a short notice for immediate requirements.

For both risk-lovers and averse investors, fixed deposits or term deposits help in striking the right balance in your investment portfolio. It is good to invest money but during the ongoing pandemic where a lot of people have lost their jobs, some desperate measures are the need of the hour. To survive such hard times it is imperative to have cash handy. The economy is suffering a major hit due to COVID-19 and many are facing major consequences due to illiquidity.

Wait before Going for Long-Term Investment Options

Amid the growing uncertainties, it may not be a sensible decision to put all your savings in a bank FD or any other long-term saving schemes like Provident Funds, Fixed Deposits, right now. The purpose of these investments is simple as they serve well when their duration is completed as it can lead to a cash crunch before the maturity of the deposit, and this might be the last thing that we need today.

And if you have already invested in a fixed deposit scheme then you don’t need to take out your money right away. During the pandemic, the rate of interest on FD has been reduced and may fall further as the situation worsens. It seems unlikely that the interest rates that you were getting on your FDs 2-years back will reflect anytime soon. So continue with your investment unless it is otherwise.

For the Elderly People and Retirees

In case you have recently retired and have a good gratuity amount with you then you skip investing in a fixed deposit. FD interest rates can crash anytime and you will be left with meager interest income that is of no use. If you don’t have a regular income then it might not be favorable to lock your money in a bank FD. You may need cash to meet a medical emergency and any other financial crisis.

If you have a flowing income and sufficient funds then you should definitely invest in an FD. But before that you need to take care of the following points:

Check the Minimum Deposit Amount

The minimum and maximum deposit amounts vary for different banks and financial institutions. It is suggested to check with the bank before investing your money. For example, the State Bank of India (SBI) has a minimum fixed deposit amount of Rs 1000.

Check the FD Interest Rate

Fixed deposit scheme provide interest on both cumulative as well as non-cumulative basis, depending on the choice and preferences of the applicant. You can opt for non-cumulative schemes if you are looking for a regular income on an annual, half-yearly, monthly, and quarterly basis. If your motive is savings and earn returns over a long period of time then you can opt for cumulative schemes, which pay the principal amount and accumulated interest on maturity.

The company has the discretion to change the rates of interest and FD interest rates offered by HFCs and Corporates are higher interest in comparison to the bank FDs.

For example, SBI Bank FD Rates before investing in fixed deposit scheme.


If you are the sole investor then you should nominate someone from your family who can claim the amount along with the interest earned post your unfortunate death while the FD is in force.


You can invest in a bank FD for a duration of 1 year to 10 years. You need to carefully choose the tenure, as premature closure would mean a penalty, which reduces the total interest amount earned on your FD. For instance, if you think you would require the money after a period of 1-2 years, and then you can opt for an FD tenure of 2-years or less.

Monthly Interest Payout on FD

Fixed deposits are offered by almost all banks in India. With minimal documentation, a bank FD can be opened. Some banks offer fixed deposits with monthly payouts. Only if you have surplus funds you

should divert your funds from bank savings account to fixed deposits as the interest paid is comparatively higher but still low. You can opt for a fixed deposit in the same bank in which you have your savings account and other banks like HDFC Bank Fixed Deposit, Axis, SBI, Axis, etc. You can opt for annual and

quarterly returns in addition to the monthly returns. When you opt for monthly returns, you should make a lump sum investment. But if you need an alternative source of income then you go for the monthly payout option on your fixed deposits. Nowadays, it is easier to find out the monthly returns on your FD with an online fixed deposit calculator.

Check out the below steps to help you calculate your monthly payout interest on your FDs-

  • Visit the bank’s website where you have an FD account or want to open one
  • Select the FD option
  • Select the FD calculator option
  • Select the FD amount
  • Enter the desired tenure
  • Select the monthly payout the interest option
  • The online calculator will give you the estimation of monthly interest payouts as per the current interest rate.

In a Nutshell

If you have surplus savings then it makes sense to park funds in bank FD. And if you are unsure about your savings then you should keep the cash flow and skip the fixed deposit option till the pandemic settles and the economic situation improves. During such unprecedented times, it does not make sense to make investments in haste; you should assess your financial situation and then make an informed investment that offers sustainable returns.


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