INSUBCONTINENT EXCLUSIVE:
Fixed deposits (FDs) are savings instruments that offer attractive interest rates for a particular amount of money that is invested for a
FDs are offered by commercial banks, post offices, small finance banks and non-banking financial companies
According to experts, FDs are one of the safest investment options
This investment avenue helps in growing savings, while offering stability and safety of principal amount compared to other investment
One can also avail a host of features and benefits, such as choosing tenor, or the frequency of interest payouts in an FD account.Where
should you investAccording to experts, the risk of default in post offices and bank FDs is unlikely
However, the returns on post offices and bank FDs is low compared to small finance banks and corporate FDs
"Investors who are risk averse should invest in post office schemes and bank FDs, while the ones ready to take risk can invest in small
finance banks and corporate FDs," said Ketan Shah, chief revenue officer, Angel Broking.What is the best lock-in period for FDsAn FD of five
years or more with a bank or post office offers tax benefit under Section 80C of the Income Tax Act
According to Mr Shah of Angel Broking, FDs are very effective when the investor has a time frame of 2-3 years
"This time frame can be relatively risky if you opt for equity or debt funds
More so, if you are opting for credit opportunity funds then risk is much higher
For such time frames, FDs can be a very sound and low risk option," he said.How much should be the share of FDs in your portfolioAccording
to experts, the share of FDs in the investment portfolio should vary with different age group and financial status
"If an individual is below the age of 30, the risk taking ability is quite higher than other age groups, so he/she can invest less in an FD
and more in equity and other investment options," suggests Ritesh Ashar, chief strategy officer, KIFS Trade Capital."For the people who fall
under the age group of 30-50, have moderate risk taking ability, so, they can invest little higher amount in FDs compared to the previous
age group, whereas people who stand in age bracket of more than 50 can opt for large investment in FDs as the risk taking ability is the
lowest for such age group."If you are young or you have limited liabilities, your risk appetite is higher and can afford to be more in
This can only be decided after a thorough risk profiling," according to Mr Shah.What should be your pick: Fixed Deposits (FDs) or Recurring
Deposits (RDs)The difference between fixed and recurring deposits (RDs) is the conceptual difference between lump-sum investing and
monthly/systematic investing, respectively
whereas RDs can act as an option for salaried person, who is looking for investment opportunities.
