Securing Your Savings: Fixed Deposit or Savings Account - Making the Right Choice

livemint.com:

Fixed Deposit is a common investment option in India, attracting investors with their stability and assured returns. When you invest in an FD, you deposit a lump sum with a financial institution for a fixed tenure at a pre-decided interest rate. Here are some of the perks of investing in FDs: 1. Guaranteed Returns: FDs offer assured returns at a fixed interest rate, which is determined when you open the deposit.

This means you can predict the exact amount you will receive at maturity, making it easier to plan your finances. 2. Higher Interest Rates: Compared to Savings Accounts, FDs generally provide higher interest rates, especially for longer tenures.

The longer you keep your money in an FD, the more it will grow over time due to compound interest. 3. Fixed Tenure: FDs come with a specific tenure, which could range from a few months to several years.

This fixed tenure ensures that you keep your funds invested for a specific period, making it ideal for long-term financial goals. 4. Lower Risk: FDs are considered low-risk investments since they are not subject to market fluctuations.

Your principal amount is safe, and you earn interest on top of it, making it a secure option. 5. Tax Benefits: Bank FDs with longer tenures are eligible for tax benefits under Section 80C of the Income Tax Act, allowing you to save on taxes while securing your savings.

Savings Accounts are familiar to most Indians, serving as a safe place to store money and facilitate everyday transactions. They are offered by banks and provide ease of access to funds. Let's explore the perks of investing in Savings Accounts: 1. Liquidity: One of the primary advantages of a Savings Account is its high liquidity.