How is Fixed Deposit a better choice over other Investment options?

Despite the emergence of multiple new investment options, the most traditional form of investment, fixed deposit, continues to attract a huge crowd still. Here, in this article, you'll get to know the primary advantages of fixed deposit over its counterparts. 

 

How is Fixed Deposit a better choice over other Investment options?

The basic purpose of investment is to get an assured return with some interest amount. Though several investment options are offering a reasonable interest rate, they still fail to give you the guarantee of return. It is because of this reason that even today, fixed deposits are widely regarded as one of the best investment options worldwide. Below listed are some key reasons which show why a fixed deposit is better than other investment options. 

• Guaranteed Investment Return

A fixed deposit offers you the guarantee of return, which is not the case with other popular forms of investment, like the stock market and mutual fund. If you are concerned about guarantee and don't prefer taking any unwanted risk, fixed deposit is meant for you. Thanks to the present FD rates being high, you will not lose anything in the long term.  

 

• Flexibility

You get a lot of flexibility in terms of fixed deposit tenure.  One can choose the tenure of the fixed deposit according to their convenience. Another benefit is that all financial institutions offer fixed deposit, whether you hold an account with that institute or not. On the other hand, only a few handpicked institutions are offering investment options such as a mutual fund, stock market, or gold.

 

• Risk Management

As mentioned earlier, fixed deposits are known for their risk-free return, and so are best suited for long term investments. Therefore, if you are planning to invest some of your savings for important reasons like marriage, retirement plan, or child's education, where you cannot take any risk, a fixed deposit can be a great option. 

 

• Interest Rate

Going by the fd interest rates, you can expect a good return through fixed deposits. Though you will find many investment options offering a better interest rate than a fixed deposit, they bring the risk factor into play. The more you take the risk, the better return you get. Hence, it is entirely your decision in the end. 

 

• Builds a Saving Habit

In other kinds of investment, you have the option to withdraw your investments even before it matures, but the same is not the case with fixed deposits. In a fixed deposit, premature withdrawals often lead to penalty fees. Though initially, you will have the temptation to spend the invested money elsewhere, with time, you will get used to it. A fixed deposit helps develop a saving habit in the long run, which will be beneficial for you throughout your life.  

Conclusion

To conclude, a fixed deposit can be summarized as guaranteed-return, which is what most people desire. You won't face an issue or regret investing your money in a fixed deposit. However, it is not recommended to withdraw the amount before the previously-agreed fixed deposit tenure as this will result in you paying an unwanted penalty fee.