Is the fixed deposit an asset or a liability? Here’s what bank customers need to know as FD interest rates rise

Is the fixed deposit an asset or a liability? With the recent rise in interest rates on fixed deposits, the debate on whether to invest in them or not is also back. One view suggests that FD accounts do not offer higher returns than market-linked products such as mutual funds, so you may want to avoid investing in them. However, there is also another point of view that encourages investing in FDs because they are safer than mutual funds and stocks.

Experts say that fixed deposits can also encourage an individual’s saving habits as one has to hold an amount for a certain period of time to accumulate a reasonable amount of interest.

“Fixed deposit is definitely a boon for clients, primarily because it’s one of the safest ways to invest with guaranteed returns, flexible interest rate payments and withdrawal options. easy,” Mahesh Shukla, CEO and founder of PayMe, told FE. PF office.

“However, returns from fixed deposit investments are significantly low and clients might prefer to explore other investment tools,” he added.

Should you invest in FDs?

You should base any investment on your risk appetite and requirements. If there is any confusion, you should consult a financial adviser. These principles also apply to fixed deposits. FDs can be a good option if you want to earn interest and a guarantee that your fund’s value will never drop. There is also a deposit insurance guarantee of Rs 5 lakh on bank fixed deposits.

Also read: Fixed deposit vs bonds: which is the best investment?

Other Options

There are several other feasible investment options other than fixed deposits. However, most experts suggest that the best way to save money is to invest in government bonds, which are even safer; although with a slightly high interest rate.

“Similarly, investments in mutual funds are also a safe and profitable long-term investment option. Other investment options that clients can explore for long-term benefit are cash funds, equity funds, fixed term plans, corporate fixed deposits, etc. says Shukla.

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