Why A Fixed Deposit Is A Risk-Free Investment?

Investments in the financial world are fraught with uncertainties. The probability of loss depends on the investment option of your choice. With fixed deposits, chances of you losing your finances are either nothing or next to nil as the returns are guaranteed and there is no deviation from the assured value.

The simplest explanation of a fixed deposit is that it is an investment avenue where you earn a specific rate of interest on the money deposited in an institution for certain tenure. Since it is not subject to fluctuation, a fixed deposit grows at a steady rate. Coupled with greater returns in comparison to savings account, it is no wonder that FDs are must-haves for risk-averse investors in India.

Why A Fixed Deposit Is A Risk-Free Investment?

Here are the various reasons why fixed deposits let you sleep more soundly:

1. Returns are Certain and Stable

A FD is investment guarantees safe and reliable returns. Unlike other investment avenues like gold, real estate, etc., fixed deposits are among the only ones that come with a stamp of guarantee on the receipt itself. Fixed deposits, besides having high reliability ratings from agencies like CRISIL and ICRA, also offer you the choice of the frequency of interest pay-out based on your needs, be it on a quarterly, half-yearly or annual basis.

2. A Fixed Duration Helps you Plan Better

Risk-free fixed deposit investments have been popular among a large section of investors in India as a safe investment avenue for many years now. With fixed deposit investments, you can opt to invest an amount for a fixed duration. The interest rates on fixed deposits depend on the principal amount you invest and the tenure. In this way, your returns are also fixed and may be calculated in advance, should you need to know how much your money would earn. A fixed duration will also help you plan on putting your earnings to good use.

To select your principal and tenure and check what you are likely to earn, use online FD calculator to calculate maturity amount.

3. The Magic of Compounding helps you Earn More

If you face no unforeseen or unexpected situation requiring the need to withdraw your money, you can plow your interest income back in the fixed deposit and earn more. This is a major benefit for fixed deposits with a longer tenure such as ones with a lock-in period of over 3 years. Thus the proceeds you receive are compounded, leaving you with a bigger lump sum on maturity.

For investors looking for a low risk investment, fixed deposits are considered the safest and most effective way to save and earn side by side. Fixed Deposits boast a high financial safety record and an appealing interest rate starting from 8.05%. There is an extra 0.25 % interest rate for senior citizens too as well as existing customers.

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