Fixed Deposits (FDs) are a reliable choice for investors seeking stability and fixed returns. In this article, we will cover the different types of fixed deposits, advantages of fixed deposits, and understand how much monthly interest can be earned by investing Rs. 50 lakh in an FD. Understanding the nuances of FDs can be key to making informed financial decisions.
What is Fixed Deposit (FD)?
A fixed deposit is a financial instrument where an individual invests a lump sum amount with a financial institution (bank or NBFC) for a fixed tenure. In return, the investor receives a predetermined fixed interest rate, providing a secure and predictable source of income.
Benefits of investing in FD
- Safety and stability: FDs are known for their safety and stability, making them a preferred choice for risk-averse investors. The principal amount remains intact, and the interest earned is fixed, offering a sense of financial security.
- Flexible tenure: FDs offer flexibility in choosing the tenure of the investment. Investors can opt for short-term or long-term deposits based on their financial goals and liquidity needs. Bajaj Finance offers flexible tenure from 12 to 60 months on their FD.
- Loan against FD: Many financial institutions like Bajaj Finance allow investors to take loan against their FDs. This feature can be beneficial during financial emergencies, as it provides a source of liquidity without breaking the FD.