Investment is not a new term anymore. While everyone earns money, very few can put it into good use. Today, unpredictability rules over this competitive world. We may have a slight idea about how much we want to earn, but no one knows what to keep in stock or how to use the hard-earned money effectively. What if you are financially stable, but that’s not enough? What if one day, you decide to rule and start your own business? Why seal your dreams with your retirement date? Why not use the money to earn more money? Yes, that’s possible through investment.

Now you cannot just wake up in the morning and make an investment. It’s not that easy, especially when so many types of investment options try to lure you. Moreover, one also must be aware of the risk associated with investment as they are putting their money on stake. Let us first know about the options available. Some of the terms you might be familiar with are:

• Stocks

• Funds

• Bonds

• Bank products

• Real estate

• Annuities

• Insurance

While these are some common ways of investing, an investment that can change your life (of course for the better) is Fixed Deposits. So, what are fixed deposits and how can we benefit from investing in them? Let us have a look.

Fixed Deposit (FD):

A FD is a way of investing in bank deposits by depositing some amount of money for a certain period in a bank or financial institution. It is the easiest way of investing your money and benefit from the rate of interest offered by financial companies. Banks accept such a type of deposit as well as Non-Banking Financial Companies (NBFCs).

Why will someone invest in Fixed Deposits (FDs)? What makes fixed deposit investment so special?

Benefits of Investing Through Fixed Deposit:

• High Rate of Return: Fixed deposit is an investment with high returns. The interest rates offered on a FD account are higher than on the savings account. High-interest rates ensure high returns.

• Assurance Regarding Returns: When you open a fixed deposit account and opt for fixed deposit investment, the bank or NBFC assures a return. The amount you can earn on your deposited money depends on the interest rate which in turn depends on the tenor of the investment. However, this is not the case with other investments such as stocks or funds which depend on fluctuations in the market rates.

• Flexible Nature: Fixed deposit investment is very flexible as you can choose the tenor according to the amount you wish to invest. The investor can fix the tenor based on his needs. It can be a month or 10 years anything as per the choice of the investor. Moreover, the investor need not to have an account with the bank to open an FD. The interest rate pay outs are also flexible.

• Safe with Comparatively Low Levels of Risk: One of the main reasons for investment in fixed deposits is safety and security. Deposit Insurance & Credit Guarantee Scheme of India guarantee your investment and the RBI monitors it closely. These features ensure that your money is in safe hands. Through FD investment, you can manage the risk as they are associated with fixed returns.

• Good Liquidity: Investing in fixed deposits allows the investor to withdraw money at any time by paying the penalty in case there is an emergency. If you want to close your account, it will just take few hours or a couple of days. One may also take a loan against FD where lenders offer loans of 60-90% of deposits.

• Promote Saving Habit: As one requires to deposit a certain amount of money while investing in fixed deposits, they always have something kept in store and can count it as their savings.

These were certain benefits of investment in fixed deposits. However, before making any decision about investing in something make sure you consider your expectations and the risk it carries. So, make a smart investment and keep saving.