Bangalore: Fixed Deposit or FD is the most preferred and safe investment option. It yields up to 11 percent depending upon the bank, company and period, which resides in between 15 days to 5 years. Senior citizens get special interest rates for FDs. Though FDs are offered by both, banks and companies, bank FDs are considered to be the risk free investment because all banks function under the course of action of Reserve Bank of India, the banker’s bank.

ET expert says, those who believe FDs don’t have many benefits, now is the time to rethink as the rate of interest on FDs has increased a lot. The interest paid on an FD is paid either monthly or quarterly. Hence, in a investment of 3 lakhs at the rate of interest provided by ICICI bank will yield 2,000 per month or 6,000 per quarter at 8 percent of interest.

Financial experts advice that FDs will yield higher returns in terms of Public Provident Fund (PPF) and Post Office term deposits, Real estate any other investment. KR Kamath, PNB Chairman and MD says, “Besides, RBI has put restrictions on banks investing liquid funds. So, there is a lower pressure.”

By investing on FD, one gets an assurance of receiving regular income through interest payments for every month or quarter, which is a very useful alternative for retirees. One should understand the norms of FDs before investing in them, which yields an effective return higher than the rate of interest on FD.  

If one breaks an FD, that is, withdraws money before the maturity expires, one will be able to do it easily on one’s own will but will have to face consequences. The investor will have to pay a cost and the rate of interest provided will also be trim down to 1 percent lesser.

There are also many other alternatives of investments to FDs, like Mutual Funds, Public Provident Fund (PPF), National Saving Certificate (NSC), Stock Market, Mutual Funds along with Real Estate. Many experts say that, “Fixed Maturity Plans (FMP)” is a superior option then bank fix deposits.