5 Tips For Investing In FDs
2. Ladder Your Investments
Diffusion of your investment across various financial institutions controls the default risk but this is also a fact that your money is locked for a long time. FDs are prone to uncertainty as rate of interest tends to move in multi-year cycles. So you must build a ladder of FDs which have different tenures to avoid this uncertainty.
If you want to invest 
4 lakh, you can split the amount in four deposits of 1 lakh each for each year. When the deposit of the first year matures, you can reinvest the maturity proceeds in the 4-year FD. By doing so, the fluctuations in the interest rates will balance out over a period of time. This will also guarantee liquidity because you will have one deposit maturing every year.
