For generations, the wisdom about FD investments has been meticulously passed on within Indian families. Therefore, you will be hard-pressed to find a home without FD accounts in India. The reliable and safe nature of FDs makes them some of the most popular and preferred investment options. FDs allow you to deposit a lump-sum amount for a predetermined tenure and earn a fixed interest rate on the sum without any market risks. While this is one of the main reasons why Indians are obsessed with FDs, there are a few other benefits of FDs that captivate Indian investors. This article highlights these benefits to help you understand why Indians prefer fixed deposit investments.

• Fixed deposits offer capital safety from market volatility.
• Indians prefer FDs due to assured returns and periodic interest payout options.
• FDs are preferred because they are simple, easy, and flexible.

Here’s a list of FD benefits that lure millions of Indians to this safe investment instrument:

Assured returns

FDs are safe investment instruments that offer assured returns. The interest rate payable on an FD account is determined at the time of opening the account and it remains fixed during the entire deposit tenure. In simple words, you know exactly how much you stand to receive in returns once the FD matures.

Zero market risks

This is a primary reason why Indians are obsessed with FDs. Unlike market-linked instruments like stocks, fixed deposit investments earn returns at a predetermined rate. This rate remains unaffected by market fluctuations, which means zero market risks, guaranteed returns, and complete capital protection.

Availing easy credit

Investing in FDs offers multiple perks including easy access to credit. If you invest in a fixed deposit account, you can leverage your saved corpus to access various credit instruments like credit cards, overdraft facilities, and loans. Secured loans against FDs carry low interest rates, generally around 1%-2% higher than the FD interest rate. Since investors can borrow up to 90% of the FD corpus as a loan, securing credit for urgent requirements becomes easy, especially for those with poor credit scores. Therefore, FDs offer Indians the benefit of assured earnings as well as easy access to financing options to meet urgent needs. If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.

Simplicity

The simplicity of fixed deposits remains one of the logical reasons why Indians are obsessed with FDs. You can simply walk into a bank, post office, or NBFC office and open an FD account. If you are registered for mobile banking services, you can even open one online. Apart from a simple entry strategy, FDs are also easy to exit. On the maturity date, you simply have to visit the bank with the original FD certificate. Your FD corpus is instantly transferred to the listed bank account. This ease of managing your FD corpus starkly contrasts the process of handling other investment instruments like mutual funds and stocks. For instance, you require certain expertise and market knowledge while entering the stock market and selecting equities individually. Moreover, your equity investments must be monitored, market trends require evaluation, and your portfolio must be reviewed frequently. You can invest in FDs without any of these hassles.

Source of regular cash flow

Fixed deposit accounts have long served as a source of regular income for retirees. Non-cumulative FDs offer various interest payout options, where the investor can decide if they want monthly, quarterly, or yearly interest payments. This makes them ideal for investors seeking a regular cash flow to meet monthly expenses.

Good for small investors

One of the chief FD benefits remains its accessibility for small investors. Small retail investors in India like low-income individuals, housewives, and retirees can invest in FDs with a nominal lump-sum amount. Since most banks offer FDs starting from Rs. 1,000 onwards, it’s easy for small investors to mobilise their savings and earn interest at a higher rate than regular savings accounts. You can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 7.95% p.a.

Flexible tenures for different goals

This is another potent reason why Indians are obsessed with FDs. Banks and NBFCs offer FDs with varying investment tenures ranging from 7 days to 10 years or more. While interest rates vary depending on the tenure of the deposit, FDs can be tailored to suit various goals with different time horizons. In fact, most Indians prefer an FD ladder with different deposits maturing at different times to preserve liquidity and still earn good returns.

Now you know all the reasons why Indians are obsessed with FDs. Fixed deposits remain the preferred investment option for Indians because these deposits offer them the safety of assured returns. Additionally, fixed deposits are easy to understand, simply financial products. Investing in them does not require additional market knowledge or trend analysis. The simplicity, safety, reliability, and good returns of a fixed deposit make the preferred investment option of the Indian middle class.