4. Tenure

FD's tenure is the period over which the investor stays invested. By and large, a longer tenure translates into a higher rate of return. Investors must match their investment tenure with their needs or objectives. For example, if the investor has an expense to meet 3 years hence, he can invest an appropriate amount in a 3-year FD to ensure that the maturity proceeds match his future obligation.

On the same lines, if there is 5-year investment tenure, then investments can be considered in tax-saving FDs; this will help the investor simultaneously benefit from tax sops under Section 80C.

5. Premature withdrawal

Breaking the Fixed Deposit means withdrawing the money before the maturity expires. This might be due to certain urgent requirement of funds or you might come across a better investment opportunity. However, there will not be any terrible loss, for example, you might receive 1% lesser interest rate than what was slated.

An alternative to breaking a Fixed Deposit is by taking a loan against the Fixed Deposit. It is very easy to obtain such loans with amounts ranging up to 90 percent of the principal and accumulated interest.