Fixed Deposit: A Comprehensive Guide
What is a Fixed Deposit?
A Fixed Deposit (FD) is a type of investment where an investor deposits a lump sum amount with a bank or financial institution for a fixed tenure at a predetermined interest rate. The principal and interest are paid at maturity, making it a safe investment option with guaranteed returns.
Types of Fixed Deposits
- Regular Fixed Deposit:
- Offers fixed interest rates and is available for various tenures.
- Interest can be paid monthly, quarterly, or annually.
- Suitable for conservative investors seeking stable returns.
- Tax-Saving Fixed Deposit:
- Offers tax benefits under Section 80C of the Income Tax Act.
- Has a lock-in period of 5 years.
- Ideal for investors seeking tax-saving options along with guaranteed returns.
- Senior Citizen Fixed Deposit:
- Special FD schemes with higher interest rates for senior citizens.
- Interest payouts can be monthly, quarterly, or annually.
- Provides added financial security for senior citizens.
- Low-risk investment with guaranteed returns.