Do you know about fixed deposit ? If you have too much money to handle and you want to get much profit for long term, then it is a best investment for you.
What is fixed deposit
It is a deposit of money that pays higher interest than a savings account but imposes conditions on the amount, frequency, and/or period of withdrawals.It is also called time deposit.
The most unusual characteristic of a fixed deposit is that the funds cannot be withdrawn for a specified period of time. In most cases, fixed deposits carry a duration of five years. During that time, the money remains in the account and cannot be withdrawn for any reason. Individuals, corporate entities, and even non-profit organizations that wish to set aside funds and limit their access to the funds for a period of time often find that fixed deposits are a simple way to accomplish this goal. As an added benefit, the monies in the account will earn a fixed rate of interest regardless of any fluctuations in interest rates that apply to other types of accounts.
Fixed deposits are loan arrangements between account holder where a specific amount of funds is placed. The saving is earns based on fixed rate of interest according to the bank term and condition.The fixed rate amount will be influence by type of currency, duration and location of the deposit made.
Advantages of Fixed Deposit
1. Extremely Safe
2. Earns you a Decent Rate of returns
3. Guaranteed returns
4. You can pledge your FD and get loans at reduced rates
( Wiki Answer )
Disadvantage of Fixed Deposit
1. Won’t give the same returns that you may get in the stock markets.
2. Doesn’t offer protection against inflation.
How Do Fixed Deposit Work
With a fixed deposit, one of the most unusual characteristics is that funds cannot be withdrawn for a fixed period of time. The fixed deposit term can vary anywhere from 1 month to 5 years. When invest in fixed deposit, there’s are different ‘tenure’ or term option. Each ‘tenure’ ore term comes with a predetermined interest rate.
That’s some short description about fixed deposit. Hopefully it will help you to make decision before invest in fixed deposit.