Why FD is the Most Practical Form of Investing?

Fixed deposits are often considered an oasis of hope in a sea of despair. It is a cushion that eases financial disruptions. When you have a fixed deposit, you are sure of getting money during times of need.

This article contains the top-4 reasons why you should invest in the best FD plan.

  1. Stable Returns

It is true that fixed deposit interest rates have gradually nosedived from their peak a few years back. In some cases, they offer lower returns than the inflation rate. In contrast, the equity market and mutual funds may offer much higher returns. However, all these factors have not taken away the sheen from fixed deposits. Indian investors still choose the best FD plan as their first choice. The best fixed deposit, such as those offered by housing finance companies, offers the highest interest rates and gravity-defying returns. Moreover, unlike the equity market, the returns from the best FD plan is stable. When you choose the financial institution intelligently, you can stay assured about the returns, thereby making financial management easy.

  1. Multiple Payout Options

Human beings need money for survival. The best FD plan comes in two shapes – cumulative and non-cumulative. When you have a financial goal, such as children’s higher education, wedding, house purchase, or travel, you can invest in a cumulative fixed deposit with the highest interest rates. Cumulative fixed deposits enable you to save for the future. However, if you need money for taking care of everyday expenses, you may invest in a non-cumulative fixed deposit. The best non-cumulative FD plan provides you with a predefined amount every month. Alternatively, you can choose the quarterly, half-yearly, or annual payout modes. Hence, investing in the best FD plan is a sure shot way to get funds for all your needs.

  1. Loan Facility

A loan in any form is the fastest way to get money during times of need. But wait!!! Did you know you can also get a low-interest loan when you have an FD certificate?

Lenders like PNB Housing provide loans against FD facility to investors investing in the best FD plan. You can express the desire to your lender, and the lender informs you of the interest rate and repayment tenure. At any stage, you do not need to sacrifice the capital appreciation, as the pledged fixed deposit continues to earn interest. Lenders generally charge a 2% higher interest rate on loan against FD than the highest fixed deposit interest rates.

Hence, a fixed deposit can act as a loan instrument when you need urgent money.

  1. Flexible Tenure

The best FD plans are flexible, meaning you can keep your money with the financial institution for a short duration, as well as a long duration. The shortest duration is one year, and the longest duration is ten years. If you have some extra cash in your hand that you might not need now, it is better to park the money in the best FD plan, as it can provide you with a larger sum.


Besides the reasons mentioned above, the best FD plan also offers a premature withdrawal facility. However, financial institutions generally charge some fee for allowing premature withdrawal. Moreover, a fixed deposit with the highest interest rates inculcates the habit of saving. You can conveniently invest a tiny part of your monthly income to create an enormous corpus for the future. Hence, a fixed deposit is not only a smart mode of investment, but also the most practical form of investing.