In today’s dynamic economic environment, many individuals prefer investment options that offer clarity on returns and lower exposure to market volatility. A Fixed Deposit (FD) is one such option. Unlike market-linked investments, FDs offer predetermined interest rates for a fixed tenure, making them suitable for those who prioritise capital stability and predictable returns.
How Does a Fixed Deposit Work?
A fixed deposit allows you to invest a lump sum amount for a predetermined tenure at a fixed interest rate. At maturity, you receive the principal along with the applicable interest.
Financial institutions offer FD tenures usually ranging from 12 months to 60 months*. Premature withdrawal may be permitted subject to applicable terms and interest adjustments.
Because the interest rate is fixed at the time of booking the FD, you know in advance the maturity value (if held until maturity). This predictability helps in financial planning.
Top 5 Reasons that a Fixed Deposit is Better than Any Other Investment
A fixed deposit is a good investment option compared to other market-based investment options.
Below are five top reasons you must know why a fixed deposit is better than any other investment.
1. Stability of Returns
Unlike market-linked investments such as equities or equity mutual funds, fixed deposits are not directly affected by stock market volatility. The interest rate remains fixed for the selected tenure. Additionally, investing with highly rated institutions adds an extra layer of comfort.
2. Predictable Maturity Value
When you book an FD, the interest rate is predetermined. If the deposit is held until maturity, the principal and applicable interest are paid as per agreed terms. This predictability makes it easier to plan for short-term financial goals such as travel, home renovation, or planned expenses.
3. Loan Against an FD
A loan against an FD is a great feature that makes a fixed deposit better than any other investment. As an investor, you must know that you can avail of a loan of usually up to 75%* against your fixed deposit, depending on the financial institution's policies. As loans are a lending tool that helps you during financial emergencies, an FD can be utilised to obtain loans according to your convenience.
4. Flexibility
To open a fixed deposit account, you can choose your preferred fixed deposit scheme between - cumulative and non-cumulative fixed deposit schemes. You will be able to withdraw or receive the maturity amount at the end of your investment tenure in a cumulative fixed deposit. In a non-cumulative fixed deposit, you can receive monthly, quarterly, half-yearly and yearly payouts. Another reason an FD is better than any other investment is that you can choose the tenure and FD amount according to your convenience and financial goals.
5. Premature Withdrawal
While FDs are meant to be held for the chosen tenure, most institutions allow premature withdrawal subject to applicable interest adjustments or penalties.
Instead of breaking the FD, investors may consider using the loan against FD facility to avoid affecting long-term returns.
Book Shriram Fixed Deposit for Competitive Returns
Fixed deposits continue to remain a popular choice among conservative investors due to their predictable returns and structured tenure.
If you are looking to include a stable instrument in your portfolio, you may explore Shriram Fixed Deposit, which offers:
- Interest rates of up to 8.15%* p.a. (inclusive of 0.50%* p.a. for senior citizens and 0.05%* p.a. for women depositors)
- Tenures ranging from 12 to 60 months
- Loan against FD facility
- Strong credit ratings from recognised agencies
Before investing, always review the applicable terms and ensure the product aligns with your financial objectives.
FAQs
Which investment is better than FD?
There is no single “best” investment. Market-linked products may offer higher return potential but carry higher risk. FDs are generally preferred by individuals seeking stability and predictable returns.
Is a fixed deposit the best investment?
A fixed deposit may be suitable for conservative investors who prioritise capital stability and predictable returns. The “best” investment depends on your goals and risk tolerance.
Which investment is best and safe?
Among common financial instruments, fixed deposits with well-rated institutions are often considered stable and low-risk. However, all investments carry some degree of risk, including issuer risk.