Indian love keeping money in their fixed deposit accounts. They feel it is the safest investment option with good return. I will try to explain why Indians love Fixed Deposits and why it is most preferred investment option.
Fixed Deposit is a term deposit with bank where money is deposited for a pre defined period. Account holders are allowed to withdraw their money even before maturity period. However rate of interest is reduced for pre mature withdrawals.
Fixed Deposit or FD account is one where you deposit certain amount for a certain fixed period.
You get higher rate of interest than a savings bank account.
Fixed Deposits can be made in any bank authorised to accept public deposits or in any post office account.
Fixed Deposits are standard deposit schemes and features are:
|Year||Interest Rates||Inflation Rate|
|Average for 10 years||7.85%||6.46%|
Above table shows average FD interest rates offered by banks on standard Fixed Deposit accounts. You can observe that rate of interest is falling down every year and compared to 2000 when rate of interest was 10%, now it is only 6.50%.
Inflation rates are now almost equal to interest rates.
You should observe that at start of this century investing in FD's made sense as return was high than inflation rate however at present time and on an average inflation rate is almost catching up return rate.
FD was a golden investment option but it is no more a good investment option.
However I suggest to keep some amount in Fixed Deposit for emergency.
You can contact any bank directly to open a Fixed Deposit account.
I suggest to always open FD account online instead of physically visiting banks. You should first open a normal saving bank account with any bank. Get internet banking user id, password. Link your account with Aadhaar and PAN. Linking your account with PAN is a good activity as it will save you from higher rate of TDS (without PAN TDS will be done at 20% instead of normal 10%).
Once you have a saving account with bank and internet banking. You can open Fixed deposit account any time. In fact FD's give more return compared to SB accounts, so it is good option to create FD whenever you have excess balance in your SB account.
If you operate your bank account online, you can open and close your FD accounts anytime.