Why FD is the safest investment out there

When it comes to investments, there’s simply no dearth of options. There are mutual funds, bonds, stocks, and even gold. However, despite having so many investment options to choose from, many investors – particularly those who are more conservative in their approach – still choose to go with fixed deposits even today.

That’s because a fixed deposit has traditionally been viewed as one of the safest ways to save money. Here are some reasons why many consider an FD as the safest investment out there.

1.       Little to no default risk

One of the primary reasons why an FD is considered to be the safest investment option has to do with its low default risk. Generally, when you opt for a fixed deposit with a bank, the chances of your FD repayment being defaulted are very low.

The same goes for FDs with a Non Banking Financial Company (NBFC) as well. There are several regulations to ensure that only NBFCs with a high net worth and strong investment credit ratings are allowed to offer fixed deposit services to the public. And in the case of a post office fixed deposit, the default risk is virtually zero, since it is backed by the Government of India.

2.       FDs are insured

As you know by now, bank fixed deposits carry very little default risk. However, even in the off chance that a bank fails to repay its depositors for any number of reasons, you’re still protected. How, you ask? Through the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme.

The DICGC is an entity of the Reserve Bank of India that provides insurance for fixed deposits. If your bank fails to repay your fixed deposit, all that you need to do is file a claim with the DICGC. Currently, the scheme provides insurance for up to a maximum of Rs. 5 lakhs.

3.       Guaranteed returns

Another major point in favour of fixed deposits is the fact that they provide guaranteed returns to the investor. With other investment options such as mutual funds and stocks, the returns are market-linked, and therefore, they can fluctuate. While the returns on such investment options can potentially be higher than that of FDs, they also come with the risk of being lower, depending on the market movements.

However, with an FD, the interest rate that you get at the time of opening the deposit stays the same throughout the tenure and doesn’t fluctuate. For instance, if the interest rate at the time of opening an FD is at 6%, you get to enjoy interest at the same rate each year till maturity.


Also, with a fixed deposit, you can stay in complete control of your investment throughout the tenure. Since there’s no lock-in period, you can close your FDs prematurely at any point in time and get your investment capital and accumulated interest. That’s not all. Thanks to the increased proliferation of online banking and financial services, you can compare and invest in the best FD, all within just a few minutes.

Looking to open a fixed deposit? Check out the many FD options available on Finserv MARKETS and choose the fixed deposit scheme that best fits your needs.