Is an FD The Best Investment Option in India?

Maximise your returns with FDs, India's leading investment solution. Discover the benefits of Fixed Deposits and secure your financial journey effortlessly.
3 mins
29 August 2023

When building your investment portfolio, it is essential to evaluate all the options available before selecting a few to ensure that you benefit from maximum returns.

No one option would allow you to meet all your investment goals here. However, picking the right ones will allow you to maximise the returns on your investment in a time-efficient manner. One such way is a fixed deposit. Here is a look at some situations where investing in an FD can serve as the best choice for you.

If you are a seeking retirement

If you are seeking retirement, you should plan your retirement as early as possible. It helps you stay invested for a more extended period, thereby increasing your income once you retire. A high-yielding FD such as the Bajaj Finance Fixed Deposit will allow you to accomplish your post-retirement goals with ease.

It is backed by CRISIL AAA/STABLE and [ICRA]AAA(Stable) and can fetch you interest up to 8.60% p.a. Choosing the non-cumulative FD over a cumulative fixed deposit will help you access interest at periodic intervals of your choice. This feature is especially beneficial when it comes to financing post-retirement life.

If you want to balance a high-risk portfolio

You may be wary of high-risk investment options such as mutual funds and equity or may have a portfolio that already has high-risk investments. In either case, you can turn to fixed deposits to add more safety and stability to your portfolio. Since market forces don’t affect them, they are risk-free.

If you are looking at long-term growth

If you are an investor and looking to grow your funds over 5 or 10 years, fixed deposits are ideal for you. By choosing a cumulative fixed deposit, you can compound the interest and allow your funds to grow steadily over the years. Whether you’re investing in building a corpus or saving up to buy an asset, or have long-term goals, a fixed deposit serves as the ideal investment instrument.

If you are a business owner

As a business owner who has some money to spare, fixed deposits are the best place to park these surplus funds. Instead of putting them in a savings account where they earn a meagre 4% to 5% interest, invest in an FD to make around 8% as interest. Besides, you can use your fixed deposit to avail of a loan in the future if you need funds on an urgent basis. In such a situation, the FD will act as collateral.

You can easily calculate the interest returns with the help of Bajaj finance FD calculator.

With scores of advantages, including fixed deposits in your investment mix is a wise decision. Regardless of how much you can afford to invest, you can open a fixed deposit with as little as Rs. 15,000 and get its benefits.

Apart from FD, some other safe investments include PF, NPS Bonds, Certificates of Deposit etc.

Advantages of Fixed Deposit Investments

  1. Safety and Guaranteed Returns: Fixed deposits are one of the safest investment options. They offer guaranteed returns, making them a reliable choice for risk-averse investors. The principal amount remains secure, and you receive the predetermined interest on maturity.
  2. Stable and Predictable Returns: Fixed deposits provide stable and predictable returns, as the interest rate is fixed at the time of investment. This allows investors to plan their finances effectively and ensures that they know the exact amount they will receive upon maturity.
  3. Flexibility in Tenure: Fixed deposits offer flexibility in choosing the tenure, which can range from a few days to several years. This allows investors to align their investments with their financial goals, whether short-term or long-term.
  4. Loan Against FD: Investors can avail of a loan against their fixed deposit, providing a source of funds without breaking the FD prematurely. The loan is typically available at a lower interest rate compared to other loans.
  5. Senior Citizen Benefits: Generally higher interest rates on fixed deposits for senior citizens are provided, making them an attractive investment option for retirees.
  6. Diversification: Fixed deposits offer diversification in an investment portfolio. They provide a low-risk component that balances the overall risk profile.
  7. Easy Application and Low Entry Barrier: Opening a fixed deposit account is straightforward, with minimal documentation. The low minimum deposit requirement makes it accessible to a wide range of investors.
  8. No Market Volatility: Unlike equity investments, fixed deposits are not affected by market fluctuations. Your returns are not tied to stock market performance, making them a stable investment option.
  9. Wealth Preservation: Fixed deposits help preserve and grow wealth over time, especially when considering the compounding effect on reinvested interest.
  10. Regular Income Stream: Fixed deposits can be structured to provide regular interest payouts, making them suitable for those seeking a steady income source.

Frequently Asked Questions

Is it a good idea to put money in FD?

Putting money in Fixed Deposits (FDs) can be a suitable option for certain investors based on their financial goals and risk tolerance. FDs offer a fixed interest rate over a specified period, providing stability and predictable returns. They are relatively low-risk investments, making them appealing to individuals who prioritize capital preservation. 

Are FDs suitable for short-term or long-term investment goals?

FDs can be suitable for both short-term and long-term investment goals, depending on your objectives. Assess your investment horizon, risk tolerance, and financial goals to determine if FDs align with your needs.

How do FDs compare to other investment options in terms of returns and risk?

FDs offer stable returns with lower risk compared to some other investment options. They are suitable for conservative investors seeking capital preservation and a fixed income stream.

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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.