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16 SEPTEMBER, 2019
A fixed deposit has historically been the most attractive investment option for Indians. This is because fixed deposits usually offer a higher rate of interest on investment than any savings bank account in India.
What is a fixed deposit?
Fixed deposits (FDs) hold money for a fixed period of time, which upon maturity is returned to the investor in principal and with the interest earned.
The rate of interest is mostly predetermined and fixed in FDs. There is also an option today for investors to opt for flexible interest rates, though only a select few financial institutions offer its investors this option.
Fixed deposits generally have a lock-in period and an investor cannot withdraw the money deposit before this period is over. If, due to unforeseen circumstances the investor needs to withdraw, the money, he will need to break his fixed deposit. On breaking the fixed deposit, the investor becomes liable for a small fine levied on the interest rate.
Types of fixed deposits:
The change in the rate of interest is determined by RBI guidelines.
Fixed deposits have been a very attractive mode of investment for Indians over the years because of the security of the principal amount and the steady growth of the money invested besides assured rate of interest . It also gives investors a regular source of income through interest, which they can either claim or reinvest. With banks offering better interest rates to its investors, popularity of fixed deposits will only increase with time.
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