Top Reasons Why FD Should Be in Your Investment Portfolio

In India where people prefer saving money, a fixed deposit is considered one of the safest ways of investment for a long. The reason for preferring FD as an investment instrument is its guarantee of providing returns. However, because of the falling rate of interest on FD and day-to-day increasing awareness towards other investment instruments, equities are a better option to invest your money in the long term.

Read more
Best Investment Plans
  • Save upto ₹46,800 in tax under Sec 80C

  • Inbuilt Life Cover

  • Tax Free Returns Unlike FD+

In-built life cover
Get Guaranteed returns upto 7.5%*
Invest in 100% Guaranteed Return Plans with Tax benefits under sec 80C & No Tax on returns*
+91
Secure
We don’t spam
View Plans
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs Tax benefit is subject to changes in tax laws
Get Updates on WhatsApp
We are rated~
rating
58.9 Million
Registered Consumer
51
Insurance Partners
26.4 Million
Policies Sold

Most of the investors of the new generation opt for investing in market-linked products such as mutual funds. Even though it is a great move, but that does not mean Fixed Deposits cannot be or should not be part of your investment portfolio.

Comparison Between
Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund
Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund
Guaranteed Return Plans
Returns Before Tax
7.5% (TAX-FREE)
Returns After Tax
7.5%
Guaranteed Returns
Yes
Life Cover
Yes
Tax on Profit
Tax Free*
Risk
No Risk
awards
Still Better than FD’s and Debt Mutual Fund
Fixed Deposits
Returns Before Tax
7% (TAXABLE)
Returns After Tax
4.8%
Guaranteed Returns
Yes
Life Cover
No
Tax on Profit
Taxable
Risk
Low Risk
Debt Mutual Fund
Returns Before Tax
8% (TAXABLE)
Returns After Tax
5.5%
Guaranteed Returns
No
Life Cover
No
Tax on Profit
Taxable
Risk
High Risk
VIEW PLANS
*For annual premium upto ₹5 Lacs

FDs are a good addition to your investment portfolio and here we are discussing why:

Top Reasons for Investing in Fixed Deposits:

  1. Fixed Deposits Help to Reduce Your Portfolio Risk:

    One of the best ways to create wealth is the asset allocation. There are various asset classes like equity, gold, fixed deposits, etc., and all of these play different roles in your investment portfolio.

    On one hand, where mutual funds provide growth potential to your money over the long term, the other hand, fixed income options like Fixed Deposit bring stability to your portfolio as they offer guaranteed returns.

    If your investment portfolio has the right diversification across different asset classes, which includes FD, it makes sure that the swing in your investment returns is kept to the minimum and you get a stress-free investment experience.

  2. FDs are the Best Investment Method for the Goals that Cannot Wait:

    Fixed Deposits ensure guaranteed returns upon their maturity. Therefore, in case you have some financial goals that may not wait and to achieve that you require a certain amount within a predefined time frame, then you must include fixed deposits in your investment portfolio.

    For instance, let us imagine that you require Rs.2 Lakhs for the admission of your kid’s school after two years. In this case, you know the exact amount that you need after a fixed tenure. Now, in this case, a fixed deposit is the best investment option for you.

    Therefore, by looking at the rate of interest on FD and the tenure, you can accordingly deposit your money. This way, you will be able to fulfill your goal in the tenure you want.

  3. Fixed Deposits Offer Surety of Returns Upon Maturity:

    When you invest your money in a fixed deposit, you already know the amount that you will get at the time of its maturity. Despite the performance of the economy and the downfall in the rate of interest, you will get the returns as per the interest rate that was agreed upon at the time of the FD deposit.

    This feature of a fixed deposit helps you to plan your expenditure as you know the amount of money that you will get after a fixed tenure.

    fd return beater
  4. You Can Select Between Cumulative and Non-Cumulative Terms:

    Fixed Deposits provide you an option to choose between non-cumulative and cumulative interest rates. This means that you can decide when you want to get the interest gains. If you are dependent on the income through interest for paying your bills and EMIs, then you can opt for quarterly and monthly pay-outs, and, you can opt for non-cumulative FD.

    Alternatively, you may want to keep your savings, gained through fixed deposit, locked up until the FD tenure ends. So, by opting for the cumulative term, you can get the compounded interest at the maturity of your FD.

    Cumulative FD Non-Cumulative FD
    The interest gained is compounded and is paid with the principal amount at the time of maturity. The interest gained is paid annually, semi-annually, quarterly, or monthly pay-outs.
    This FD type is recommended to those who do not anticipate the requirement of funds until the FD tenure ends. This FD type is recommended to those who want regular pay-outs like senior citizens.
    Cumulative FDs provide higher returns than non-cumulative fixed deposits. These FDs provide a lower amount upon maturity of FD as compared to cumulative fixed deposits.

    Note: Both these schemes are governed by the same laws for tax and provide the same tax benefits.

  5. Flexibility to Funds Withdrawals:

    If you need a financial emergency, you can easily withdraw your fixed deposits before its tenure gets over. In this case, you may have to pay a certain penalty, but the withdrawal before maturity or premature withdrawal is simple.

    This flexibility enables you to get your money at the time of need or if some financial crisis knocks. An FD is one of the secure investments and with the flexibility it also provides attractive returns.

  6. Easy Accessibility to Credit:

    You can take a loan against your fixed deposit whenever you require funds. Generally, the banks sanction up to 70% of the FD amount as a loan against it. Even the rate of interest on loan against FD is also competitive.

  7. A Good Way to Meet Your Short-Term Goals:

    The financial goals that you want to achieve within one to three years of your investment are considered as short-term goals. The main objective of these goals is to preserve the principal amount and as well as earn a little interest at the same time. Therefore, FDs are considered the best option for fulfilling such kind of investment goals.

    For example, you have to go on a family vacation next year or you want to gift your mother some expensive gift on her 60th birthday that is next year, fixed deposits are considered as the best investment for achieving such goals.

    Since you already have an idea of the cost of your trip or the cost of the gift that you want to give to your mother, hence accordingly you can make the investments by looking at the rate of interest on FD. For example, SBI Bank FD rates for a tenure of one year is 4.90%.

FD interest rates India have fallen consistently over the last 12 years.
Invest in Plans that offer Guaranteed Returns for over 25 Years

The Final Words!

It must be clear to you by now that FDs can be a good option for your investment portfolio. However, you have to remember that FDs are the best for short-term goals.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
+ Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
#Discount offered by insurance company
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

FD Calculator

Total Investment

₹500 ₹30L
Enter Total Investment

Rate of Interest (Yearly)

1% 15%
Rate of Interest (Yearly)

Time Period

1 Year 15 Years
Enter Time Period
Interest Earned
Maturity Amount

FD Rates articles

Recent Articles
Popular Articles
BOI FCNR (B)

10 Jul 2024

BOI FCNR (B) Deposits, also known as Foreign Currency
Read more
BOI NRE Term Deposit Account

10 Jul 2024

BOI NRE Term Deposit Account is a fixed deposit account offered
Read more
BOI RFC Term Deposit

10 Jul 2024

BOI RFC Term Deposit is a fixed deposit account offered by the
Read more
BOI NRO Term Deposit Account

10 Jul 2024

BOI NRO Term Deposit Account is a fixed deposit account offered
Read more
BOI Current Deposits Plus Scheme

10 Jun 2024

The BOI Current Deposits Plus Scheme is a unique option for
Read more
Application for Withdrawal of Fixed Deposit
  • 03 Dec 2021
  • 22868
Fixed Deposits are the safest investment instruments. You invest the amount of your choice as the fixed deposit
Read more
Which Bank has the Highest Interest Rate for Fixed Deposit?
  • 23 Jul 2018
  • 211493
The Small Finance Banks offer the highest FD interest rates for a tenure between 7 days to 10 years. Unity Small
Read more
SBI Fixed Deposit Monthly Income Scheme
  • 04 Apr 2022
  • 12299
Fixed deposits are the safest investment vehicles for Indian financial planners. You can open a fixed deposit
Read more
SBI Fixed Deposit Double Scheme
  • 18 Feb 2022
  • 12525
The SBI Fixed Deposit Double Scheme is named Special Term Deposit to cater to investors looking to double their
Read more
Nominee Vs Legal Heirs for Fixed Deposits
  • 21 Dec 2023
  • 3224
Fixed deposits are a popular investment option for individuals who wish to earn a stable rate of interest on
Read more

top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL