Fixed Deposits (FDs) are a safe investment option where investors deposit money with a bank or financial institution for a fixed tenure at a specified interest rate. Unlike market-linked investments, FDs provide assured returns, making them popular for risk-averse investors. In India, FDs are regulated by the RBI, and they offer flexibility in terms of tenure and renewal options.

Fixed Deposits can be classified based on their tenure, interest payment frequency, and liquidity options. Common types include regular FDs, tax-saving FDs, senior citizen FDs, and recurring deposits. Each type is designed to suit different investment goals and financial needs.

In an FD, the investor's principal remains intact while earning interest at a fixed rate. The interest may be paid periodically or on maturity, depending on the deposit type. Premature withdrawals may incur a penalty but provide some liquidity in emergencies.

Benefits of Fixed Deposits:

• Guaranteed returns.
• Flexible tenure options.
• Regular income through interest payouts.
• Tax-saving benefits under certain conditions.
• Eligibility for loans against FD.

Types of Fixed Deposits:

Regular Fixed Deposits
These are the most common FDs where funds are locked for a chosen tenure, with interest rates determined at the time of deposit. Premature withdrawal may be allowed, but with a penalty.

Tax-Saving Fixed Deposits
Tax-saving FDs come with a 5-year lock-in period and provide tax benefits under Section 80C of the Income Tax Act. Premature withdrawal is generally not allowed for this type of deposit.

Senior Citizen Fixed Deposits
Available to individuals above 60 years, these FDs offer higher interest rates compared to regular FDs, providing additional income for seniors.

Recurring Deposits (RD)
RDs allow individuals to deposit a fixed sum monthly, which grows with interest over the chosen tenure. Ideal for individuals who wish to save regularly but cannot make a lump sum investment.