Bangalore: Fixed deposits are considered as the safe investment option for a long period, by a large section of investors in India. Where the person can invest an amount for a fixed duration and the banks provide interest rates based on the loan amount and the tenure of deposit. But are they the right investment option when you are planning for a long duration? A fixed deposit is often termed as Lazy man's investment. Investing in a cash flow asset will produce regular fixed payouts. The risk factor in this is you may not be able to reinvest the payed out interest at desired rates. This is known as reinvestment risk, and this effects all the fixed income assets and FD bonds. One factor that is important to note is that, fixed deposit rates are never steady. They keep altering. A year back the rate for 1 year deposits was 6.5 to 7 percent. And now the same banks offer 9 percent for the same duration. Don't be surprised if you find the rate hiked to more than 9 percent in future. Consider a case when you make an investment in fixed deposit when the interest rates are high. But when your FD is matured the interest rates are low, in such a scenario you are forced to reinvest the maturity proceeds at interest rates that are not benefiting. At times you are trapped in a dilemma of breaking your FD by paying penalties. In short the reasons why fixed deposits are not a long term good investment option is because: Low returns: Because FDs are very low risk instruments, they offer low returns comparable to alternative investment options Fixed period: Your money will be locked up in a fixed deposit for the duration of the deposit. As a result, unlike a savings bank deposit, you will lose the flexibility access your funds as needed. No tax benefit: There is no tax benefit in this investment, unlike the infrastructure bonds or the National Savings Certificate (NSC). So, even from a taxation point this is not the best of investment options. Penalty on a premature ending: If you break the FD before maturity period you will have to pay a penalty. The bank decides how much penalty you will need to pay depending on when you break the FD. Other than fixed deposit, mutual funds and stocks are other investment options for investors to invest their funds.