Fixed deposits: Should FDs be your next investment destination? Here's what top experts say
ARTHA FinPlan, shared, “At present, one may look for FDs for goals like creating a contingency fund and earning a fixed income. For example, a short-term FD can be aligned with a contingency fund. Investors especially senior citizens can invest in for their fixed income requirements.
However, one should note that FD investments up to ₹5 lakhs only are insured under DICGC. Suitable diversification, own risk appetite, goal and tenure should be considered while investing." Discussing the recent upward trend in FD interest rates in India, experts point out that while there has been an increase in recent months, the rates are not yet at their historical peak. Viral Bhatt, Founder, Money Mantra, says, “Inflation in India is currently high, at around 6.8 percent.
Fixed deposit interest rates should ideally be higher than inflation for your investment to provide real returns. While current rates are higher than inflation, you might want to compare them to potential future rates before locking in your money for a long period." One cannot afford to keep their money tied up in traditional deposits, notwithstanding how a sudden emergency may trigger redeeming these deposits midway. Bhatt explains, “Assess your need for access to the invested funds.
Fixed deposits typically have lock-in periods, and early withdrawals often incur penalties. If you may need the money in the near future, a more liquid investment might be better. Apart, you cannot ignore your appetite for market-related risk.
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