Fixed deposits are investment instruments offered by banks and non-banking financial companies, where you can deposit money for a higher rate of interest than savings accounts.It may or may not require the creation of a separate account. You can deposit a lump sum of money in fixed deposits for a specific period, ranging from 7 days to 10 years.
In simple words, fixed deposits are a high-interest -yielding Term deposit and offered by banks in India.To compensate for the low liquidity, FDs offer higher rates of interest than savings accounts.Usually, in India, the interest on FDs is paid every three months from the date of the deposit. There are two kinds of FDs in India:
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Cumulative Fixed Deposit |
Non-cumulative Fixed Deposit |
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In a cumulative fixed deposit, interest is compounded every quarter or year and paid at the time of maturity. |
In a non-cumulative FD, interest is paid out monthly, quarterly, half-yearly, or annually, as per the investor’s choice. |
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Cumulative FDs help you build a corpus by saving a large amount. |
Non-cumulative FDs help you earn regular interest payouts for meeting your daily expenses. |
With multiple entities offering Fixed Deposit, it becomes quite confusing for the investor. We understand this situation and after looking at their needs, risk-taking appetite, time horizon and a bunch of other factors, so that the return on investment meets expectation.