Five Reasons to Choose Fixed Deposits

Investment is crucial for every person. As a result, people look out for several investment avenues that offer attractive monetary returns. For beginners, bank accounts act as an ideal repository to deposit funds and reap attractive returns. However, the returns are limited, thus encouraging investors to look out for better options.

For investors who are afraid about the investment risk and look forward to availing steady returns, fixed deposits provided by banks offer attractive returns. These are timed deposits wherein a particular sum of money is deposited with the bank for a particular period, and it earns significant returns over the mentioned period.

There are several reasons to choose fixed deposits over other financial instruments. Here are the top five reasons to pick these deposits.

1. High Yields

Unlike bank accounts, the fixed deposit interest rate is significant. Fixed deposit rates in India are in the range of 8 to 12%. The yield goes on increasing with time. Thus, you will receive favourable returns with this instrument as compared to other instruments available in the market.

2. Higher Ratings

CRISIL assesses the credit rating of financial instruments in terms of investment security, returns, and credibility. Fixed deposits generally have a very high rating, thus making them favourable for investors. Moreover, they are safe as the returns are fixed.

3. Help to tackle inflation

Fixed deposit interest rates are levied quite above the current inflation rate. Thus, they will easily help to tackle the pinch of inflation which every person suffer year after year. Moreover, the concept of assured returns helps it in better inflation tackling.

4. Better Liquidity

Though bank deposits have fixed tenure, but they are versatile with terms of liquidity. This means you can easily break a fixed deposit before the given tenure. Thus, they are crucial for balancing an investment portfolio.

5. Convenience

Very less or no paperwork is involved in booking a fixed deposit at any bank. You can simply log onto the bank’s website, choose a scheme, pick a tenure, transfer the amount, and avail the certificate of deposit, all within a few seconds.