The option of investing in equity and mutual funds looks attractive due to their potential of high returns but they also come with greater risk factor where there is a chance to lose a lump sum of money due to bad timing. Fixed Deposits, on the other hand, are risk-free like other debt instruments but yield better returns than them. Assured return at the time maturity with a better rate than savings, current accounts, and government debt instruments Fixed Deposit is a great option to make investment especially for a long term period plus it also gives your financial portfolio the needed balance of decent return at no risk.
FD also gives the option of choosing the tenure and breaking the FD prematurely if required. The interest in most cases is compounded every quarter which makes the effective rate much higher than the original one. Senior citizens, on the other hand, are offered better rates than normal and they also get an exemption from tax by furnishing Form 15H. Though there is a tax saving Fixed Deposit option which gives exemption in deposit amount up to Rs. 1.5 lakh, but you can not break this FD or take loans against it.
Complete Information: 6 Reasons to Invest in Fixed Deposits
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