A fixed deposit (FD), also known as a term deposit, is a financial instrument offered by banks and financial institutions that allows individuals to deposit a specific amount of money for a fixed period of time at a predetermined interest rate. It is considered a safe and low-risk investment option.
Here are some key features of fixed deposits:
Investment Amount: You can invest a lump sum amount in an FD, typically with a minimum threshold set by the bank or institution.
Tenure: The tenure or duration of a fixed deposit can vary, usually ranging from a few months to several years. You can choose the tenure based on your financial goals and requirements.
Interest Rate: The interest rate offered on fixed deposits is generally higher than that of regular savings accounts. The rate is fixed at the time of deposit and remains unchanged throughout the tenure. The rates can vary between different banks and also depend on the duration of the deposit.
Interest Payment: The interest on fixed deposits can be paid out at different intervals, such as monthly, quarterly, or annually. Alternatively, you can opt for cumulative fixed deposits where the interest is reinvested and paid along with the principal amount at the end of the tenure.