As you build your investment portfolio, you would invest in many different instruments, and each of them would fulfil a specific function. One of these instruments that you should consider is the fixed deposit. Fixed deposits offer many different advantages and can fulfil some important roles in your investment portfolio, based on your risk profile and financial goals.
Here are a few investment goals for which fixed deposit is a great option in India.
Post-retirement savings
Once you are no more actively earning, you must limit the risk exposure of your investments. One of the best ways to do this is by investing in fixed deposits. PNB Housing offers among the best FD rates in India and is highly secure with an FAAA/Negative rating from CRISIL. You could also opt for a non-cumulative fixed deposit to get a regular income from the corpus you have built up. Fixed deposit rates for senior citizens is also 50 basis points higher compared to the rates offered to other investors.
Balance a high-risk portfolio
When building an investment portfolio, you must balance the risk among different instruments. For example, an investment into mid- to small-cap equity caries a high risk. If such a risk is realized, you do not want to lose all your capital. Therefore, you should use low-risk debt instruments to balance your portfolio. A fixed deposit can fulfil this role perfectly as it offers a fixed, guaranteed return on the investment made.
The following article is an initiative of worldprogs and is intended to create awareness among readers.
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