Is Fixed Deposit an asset or a liability? With Fixed Deposit interest rates going up recently, the debate on whether to invest in it or not is also back. One view suggests FD accounts do not offer higher returns compared to market-linked products such as mutual funds, hence you may avoid investing in them. However, there is also another view that urges one to invest in FDs because they are safer than mutual funds and stocks.
Experts say that Fixed deposits can also encourage the saving habits of an individual as it requires keeping an amount for a certain period of time to accumulate a reasonable interest amount.
“Fixed deposit is certainly an asset for the customers mostly because they are one of the most secured ways of investing with guaranteed returns, flexible interest rate pay-outs, and easy withdrawal options,” Mahesh Shukla, CEO & Founder, PayMe, told FE PF Desk.
“However, the returns from fixed deposit investments are substantially low and customers might prefer exploring other investment tools,” he added.
Should you invest in FDs?
You should make any investment basis your risk appetite and requirements. In case of confusion, you should consult a financial advisor. These principles apply to fixed deposits also. FDs may be a good option if you want to earn some interest and a guarantee that your fund’s value will never go down. There is also Rs 5 lakh deposit insurance guarantee on bank fixed deposits.
There are several other feasible investment options other than fixed deposits. However, most experts suggest that the best way of saving money is by investing in government bonds, which are even more secure; although with marginally high rate of interest.
“Similarly, investments in mutual funds are also a safe investment option and are profitable in the long run. Other investment options that customers can explore for a long-term benefit are liquid funds, equity funds, fixed maturity plans, corporate fixed deposits, etc,” says Shukla.