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A fixed deposit (FD) is a type of investment offered by banks and financial institutions where you deposit a sum of money for a fixed period, typically ranging from a few months to several years, at a predetermined interest rate. The interest rate is generally higher than a regular savings account, and the deposited amount remains fixed throughout the tenure. At the end of the tenure, you receive the principal amount along with the accumulated interest. Fixed deposits are considered low-risk investments as they offer guaranteed returns.
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Investing in equity, even for small investors, can offer several benefits
Guaranteed returns
Tax benefits
Free
Investing in fixed deposits offers several advantages:
Fixed deposits provide a fixed interest rate, ensuring predictable returns on your investment.
They are considered low-risk investments as they are typically offered by banks and financial institutions, which are regulated and insured, providing a level of safety for your funds.
Fixed deposits come with various tenure options, allowing you to choose the duration that best suits your financial goals, whether short-term or long-term.
While fixed deposits have a fixed tenure, many banks offer the option of premature withdrawal in case of urgent financial needs, although it may come with some penalties or loss of interest.
In some countries, the interest earned on fixed deposits may be eligible for tax benefits, depending on the prevailing tax laws and your individual tax situation.
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