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Reasons Why Fixed Deposit Should Be In Your Investment Portfolio

Updated On Jul 13, 2021

In India, Fixed Deposit (FD) is deemed to be one of the safest investment instruments for its surety of providing returns. However, due to the falling interest rate of FD and increased awareness for different investment instruments, equities, mutual funds, etc., are also preferred by many people nowadays. Even after the introduction of such options in the market, you should never omit fixed deposits from your investment portfolio. Here are the top reasons for which FDs are considered a good addition to your investment list:

1. Risk-Free Investment Method

The fixed deposits are one of the safest investment tools, particularly when compared to market-linked investment instruments. With less volatility, FDs ensure that the amount of your investment is safe and makes you get the assured amount at the time of maturity.

2. Provides Assured Returns

When compared to the stock market and market-linked investment tools, FDs are quite safer options to invest as it offers you security for your capital and provides you with assured returns on them. The best part of this investment instrument, that you know the amount you will get at maturity on the day of investing. It helps you set your financial goals and allows you to invest accordingly.

3. Option of Cumulative and Non-Cumulative Terms

FDs allow you to opt for cumulative and non-cumulative interest rates. It means you can choose whether you want to receive the interest payouts at regular intervals like half-yearly, or yearly to pay off your financial liabilities like EMIs, bills, etc. You can also get your capital locked up for a particular period which makes you get a high return with compound interest. 

4. Flexibility to Withdraw Funds

In case of a financial emergency, you are allowed to anytime withdraw your fixed deposit amount before its maturity. However, you may have to pay some amount of penalty, but the withdrawal is possible and simple. This option enables you to receive your money whenever you need it or some financial crisis steps in.

5. Easy Access to Credit

A fixed deposit allows you to get a loan against it, whenever you require funds. However, the sanctioned amount for the loan is generally up to 70% to 80% of the amount of FD and is provided at a competitive interest rate. With this loan facility, the FD ensures that it has got your back in the time of contingencies.

To Conclude 

Whether you are looking for security, returns, or benefits, the fixed deposit is an investment option that meets all your requirements. Moreover, the nature of fixed deposit ensures that it serves various purposes for different types of investors like high-risk investors who look to cap their invested capital or a lower-risk investor who wishes to find a safe way of earning returns. 

Also read - Post Office Fixed Deposit (FD) Scheme

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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