Why Are Fixed Deposits a Popular Choice Among Indians?

Fixed deposits are a favored choice among Indians due to their promise of steady and guaranteed returns. With fixed and assured outcomes, it provides a clear picture of what you’ll receive at the end of your investment period. This reliability makes it a trustworthy option, aiding in efficient investment planning. Whether you’re saving for specific financial goals or seeking security for your money, fixed deposits are a preferred and conventional investment avenue for many Indians. According to a SEBI survey, a substantial 95% of Indian households opt for bank FDs, valuing their non-market-linked nature, while less than 10% show interest in mutual funds or stocks.

 

Investing becomes a daunting prospect without options that guarantee returns. In such a scenario, many of us would prefer to keep our surplus untouched at the end of the month. Fortunately, fixed deposits provide a reliable avenue for investment, ensuring:

1. Predetermined returns and the safety of the principal amount.
2. A secure way to park money without worrying about market volatility.
3. Flexible options to receive interest periodically or at maturity when banks offer fixed deposits.

For those seeking guaranteed returns and having a limited understanding of risk, fixed deposits emerge as a suitable and reassuring option.

Why do people choose Fixed Deposits?

1. Assured Returns: Fixed Deposits offer guaranteed returns on the invested amount. The interest rates are fixed at the time of deposit, providing investors with a clear idea of their earnings.
2. Safety of Principal: The invested principal amount in Fixed Deposits is not subject to market fluctuations. It remains secure, ensuring that investors get back their initial investment at the end of the maturity period.
3. Ease of Understanding: Fixed Deposits are simple and easy to understand. Individuals do not need advanced financial knowledge to invest in them, making them accessible to a wide range of investors.
4. Various Tenure Options: Fixed Deposits come with flexible tenure options, ranging from short-term to long-term. Investors can choose the duration that aligns with their financial goals and liquidity needs.
5. Regular Interest Payouts: Investors have the option to receive interest payouts at regular intervals, providing a steady income stream. This feature is particularly beneficial for retirees and those looking for a regular income.
6. Tax Benefits: Certain Fixed Deposits, such as Tax-Saving FDs, offer tax benefits under Section 80C of the Income Tax Act. This makes them an attractive choice for individuals looking to save on taxes.
7. Senior Citizen Benefits: Senior citizens often receive higher interest rates on Fixed Deposits, providing an additional incentive for this demographic to choose this investment option.
8. Liquidity: While Fixed Deposits are meant to be held until maturity for maximum returns, they still offer a degree of liquidity. Premature withdrawals are allowed, albeit with some penalty, in case of urgent financial requirements.
9. Low Risk: Fixed Deposits are considered low-risk investments compared to market-linked instruments like stocks. This makes them suitable for conservative investors who prioritize capital protection.
10. Bank Reputation: Many individuals prefer placing their money in Fixed Deposits with reputable banks, adding an element of trust and security to their investments.

The combination of guaranteed returns, safety of principal, simplicity, and flexibility makes Fixed Deposits a popular and enduring choice among Indian investors.

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Disclaimers:
An investor education initiative By Findola Wealth Research Team.

This article is generated and published by Findola Wealth Research Team.

Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.