Fixed deposits (FDs) are considered one of the safest investment instruments in the market today. Particularly for risk-averse investors who do not want to gamble with their existing funds, FDs may seem like a foolproof way to ensure guaranteed returns. (Though a 3.2% interest rate is still not enough to combat mounting inflation, it still beats the 0.05% interest rates from regular savings accounts.)
However, the last few years have seen the rise of other investment options that serve as alternatives to FDs, such as government bonds, equity funds, and more. These options have grown in popularity with their return rates and relative stability that appeal to investors seeking to diversify their portfolios with less volatile assets.
Before we look at the alternatives to FDs, let’s first understand what they are.
What Are Fixed Deposits?
Fixed deposits are also known as time deposits. They generate guaranteed interest over a specified duration for the money that you deposit in the bank....