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CA Neetu Jain
CA Neetu Jain
LinkedIn Top Leadership Voice | Strategic Consultant of Compliances | Dubai | India
Published Mar 10, 2022
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When it comes to investing, most people tend to choose safe options like fixed deposits. Although fixed deposit is a safe investment option, it offers low returns. People often compromise on high returns because of lack of risk taking appetite.
Investors should not put money into FDs for long terms. The reason behind this is that interest rates could go up due to rising inflation at least in the next one year or so and in such a case, the risk of losing out is high.
While subscribing to fixed deposits, people usually do not take inflation into consideration. With rising inflation money loses value, because of growing inflation, there would not be any significant increase in the purchasing power.
The current inflation rate is almost 5% which means that your money is constantly losing value and if the inflation rate remains the same in future, the interest you earn on the FD investment won't matter much as your purchasing power won't be any bigger.
In fact, this inflation will eat away your returns and despite investing for such a long period of time, you wouldn't gain much
Currently, most FDs offer an interest rate of 7 to 8 per cent max which is not much as some other investment options like debt mutual funds can help you earn 10 to 18 per cent interest.
Alternative Options to Invest
Investors should also consider risk factor associates with other options.
The article is for general information, not for solicitation.
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16 Comments
Nathen Drake
Senior Analyst at Google
1y
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I agree that fixed deposits is having low-interest rates while comparing to mutual funds and dept funds. But!!!The risk factor of mutual funds is high when compared to Fixed deposits, and the interest rate of fd is increasing, for your ref - https://stfc.in/fixed-deposit/interest-rates/
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Shishir Kumar
Manager
2y
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But Safe one subject to controlled Inflation.
Pushpahas Singh
HR Head (Manufacturing), all 7 plants of Hero MotoCorp Ltd. (Retired)
2y
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good note.What is REIT?
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KARELIYA ROHIT
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2y
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Hello
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CA BHAVIN SHAH
Business Coach | Visiting CEO & CFO Services | Youtuber | Structure Advisory | Tax & Audit Consultant | Entrepreneur | Business & Data Analyst
2y
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Bond Investment is also good option against FDR ; without lock-in and secured too
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