fixed deposit pros & cons

Download Fixed deposit pros & cons

Post on 04-Jul-2015



Economy & Finance

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  • 1. Fixed Deposit Pros & cons PRESENTED BY: BANKBAZAAR.COM

2. Fixed deposits happen to be one of the most favoured forms of saving/investment in India. People look at it as a form as saving for the future benefit and some think of it as a wise investment of savings. Although there are many reasons why this always seems to work in favour of the investor positively, there are a few things in the downside of fixed deposits. Lets take a look at the pros and cons of investing your money in a fixed deposit account. 3. Pros of Fixed Deposits: High rates of interest - As is already well-known fixed deposit accounts and considerably good amount of interest; more than the interest earned on any other forms of savings accounts. Safety of your future if you choose the right bank or company, you can consider your future quite secure. You will get back the money you put away along with a fat sum of interest. Lower risk as compared to risk involved in investing in stocks. When you invest in stocks, there is a chance of you losing the initial value of the money you invested. Fixed deposits involve a very low risk of losing your investment. 4. Cons of Fixed deposits: Protection against inflation. The fixed interest rates which are given on fixed deposits do not give you any protection against inflation. The cost of living is constantly rising a wiser option would be to invest in shares of a good company which goes in rhythm inflation. In the long run, the value of the return on your investment in a fixed deposit account might be much lower than what you are likely to get from shares in a company which beats inflation. One of the biggest drawbacks of having a huge part of your savings in a fixed deposit account is that you cannot withdraw funds during the tenure. This, however, will only be a drawback if there happens to be any emergency that comes up during the fixed period; an emergency which would require you to break the deposit. The risk factor. It is very important to be careful in choosing the right financial institution for saving. In the case of a financial crisis remember that fixed depositors will be one of the last to be paid off. The companies which offer a very high rate of interest are usually the ones which have a higher risk. Income Tax. The interest received on fixed deposits is treated as income and is taxable. So if you look at it from the investment point of view, there are a few other options such as mutual funds which will give you some tax benefits. 5. As every form of investment has its pros and cons, it is not fair to claim that one stands to be much better than the other. There are several personal factors and requirements which should be taken into consideration while making choices with your savings and investments. Companies which offer unreal rates if interest and saving schemes are usually the ones which involve the highest amount of risk. Be wise when you choose to invest your hard-earned money. 6. THANK YOU for Your Time. FOR MORE DETAILS VISIT: HTTP://WWW.BANKBAZAAR.COM/FIXED- DEPOSIT.HTML