Fixed deposits are among the most traditional and secure investment options offered by banks. With higher interest rates than current or savings accounts, fixed deposits provide a consistent income stream for investors, making them an essential part of a diversified portfolio.
Why Invest in Fixed Deposits?
Here are some top reasons for choosing fixed deposits:
– Guaranteed Returns with Minimal Risk: Fixed deposits offer assured returns and are considered risk-free.
– Higher Interest Rates: Compared to other risk-free investments like Treasury Bills or Government Bonds, fixed deposits generally offer better interest rates.
– Flexible Tenures: Fixed deposits offer flexibility in terms of tenure, ranging from as short as 7 days to as long as 10 years, allowing investors to choose a term that suits their financial goals.
– Loan and Overdraft Options: Investors can use their fixed deposits as collateral to avail of loans or overdrafts when needed.
– Liquidity: Fixed deposits are liquid investments, meaning you can withdraw your funds partially or fully whenever required.
– Peace of Mind: With funds secured in fixed deposits, investors can focus on their business or job without the worry of market fluctuations.
– Tax Savings: Five-year tax-saving fixed deposits provide tax benefits under Section 80C of the Income Tax Act, helping investors reduce taxable income.
Fixed Deposits: A Safe Investment Choice
While some argue that variable income investments offer better returns, they come with higher risks. Products like mutual funds, equities, and derivatives can yield substantial returns, but they also carry the potential for losses in adverse market conditions.
An ideal investment portfolio blends both risk-free and riskier assets based on an individual’s risk tolerance and financial goals. Wealth management experts, such as those at Yes Bank, evaluate clients’ objectives and risk preferences to help them build a well-balanced portfolio tailored to their needs.
