Chapter 3: Importance of Fixed Deposit

Importance of Fixed Deposit Chapter Image

A fixed deposit (FD) is a type of investment offered by banks and financial institutions, where you deposit a lump sum amount for a fixed period of time in exchange for a predetermined interest rate. FDs are considered a safe investment option as they provide guaranteed returns and preserve your principal amount. They are an excellent choice for those seeking low-risk investments and a steady source of income.

Key Features:

  • Fixed Tenure: The investment period ranges from a few months to several years.
  • Interest Rate: Offers a higher interest rate compared to regular savings accounts.
  • Premature Withdrawal: Possible, but usually incurs a penalty.
  • Safety: Considered a safe investment as it is not subject to market fluctuations.

Benefits:

  • Assured Returns: Guaranteed returns at the end of the tenure.
  • Low Risk: Safe investment option with minimal risk.
  • Tax Benefits: Some FDs offer tax-saving benefits under certain conditions.

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