When you are building your investment portfolio, in order to ensure that you benefit from maximum returns, it is important to look into all the available options before choosing the appropriate ones. Despite the availability of numerous low-risk financing options, a fixed deposit is always a preferred choice for many. It is extremely important to invest a part of your investment. This not only encourages the habit of savings but also accumulates a reserve for financial emergencies and plan for retirement.

With that said, let’s discuss what makes an FD a best and safe investment option, especially for those who aren’t aware of the capital market.

Fixed Deposits are Unaffected by Market Volatilities

A Fixed deposits are not linked to the market. Although market-dependent instruments guarantee attractive returns, they are vulnerable to the downturns in the financial market, and thus, pose a risk of negative returns and capital loss. Fixed deposits are worth investing in to protect your financial portfolio against risks. There are many banks and NBFCs that guarantee security and stability on FDs.

Fixed Deposits Enable you to Grow your Wealth at Competitive Interest Rates

Upon choosing the right fixed deposit, you will enjoy significant returns. Whether it is banks or NBFCs, they both offer attractive returns on fixed deposits. In fact, as compared to the interest rates on savings accounts, which ranges around 5% to 6%, the interest rates of fixed deposits are 2-4% higher. With that said, the highest FD rates can go up to 9%. It is important that you open a fixed deposit account with an established institution to ensure stability and higher returns. This makes fixed deposits the best financial instrument for long-term goals like retirement, child’s marriage, higher education, etc.

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Fixed Deposits Offer Provisions for Auto-renewal and Flexible Investing

FDs allow you to obtain liquidity for all your long-term and short-term goals. For example, if you are planning on upgrading to a new four-wheeler after 4-5 years, you can start a fixed deposit with a maturity of 5 years (60 months). NBFCs and banks allow investors to time their investments by offering a flexible tenure. And the best part is that irrespective of the tenure you have chosen, you can extend the life of your fixed deposit. That is, if your fixed deposit has a five-year tenure, you can opt to extend the tenure to 7 years or 10 years or more with the auto-renewal option.

Fixed Deposits Serve as an Investment and Savings Tool

One of the primary reasons why the majority of individuals prefer fDs is that it encourages the habit of saving, especially among the millennials. You can either deposit the lump sum into the FD account for a particular period or choose to make bite-sized contributions every month for a specific tenure. When you make monthly payments, each deposit you make every month is considered as a separate deposit. So, you will earn an interest rate on each deposit you make. This is a hassle-free way to boost your saving power.

These are some top reasons why fixed deposits are the best investment vehicle for safe and secure investing.


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