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Top Reasons to Choose Fixed Deposits for Secure Investments and Stable Returns

July 19, 2025

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Are you looking for a secure way to invest your hard-earned money with stable returns? If so, you’re not alone. Many are turning towards Fixed Deposits (FDs) as a reliable investment option amid economic fluctuations. In this blog, we’ll delve into the compelling reasons to choose fixed deposits, ensuring that your investment not only grows but also remains protected

Guaranteed Returns:

Fixed deposits stand out in the financial landscape due to their guaranteed returns. Unlike stocks or mutual funds where your earnings fluctuate with market conditions, FDs promise a fixed interest rate throughout the tenure of your investment.

1. Stability:

With FDs, what you see is what you get. If you're promised an 8.10% return annually, that's exactly what will reflect in your account upon maturity.

2. Predictability:

This makes financial planning much easier. You can accurately calculate how much money you will have at the end of your FD period.

3. Higher Returns:

Fixed Deposits offer higher returns compared to Savings Accounts. You can opt for high-interest FDs to maximise your savings. Additionally, for long-term FDs (tenure more than 6 months), the interest is calculated using the compound interest method.

Meaning your the accumulated interest also keeps earning interest till the time of maturity. This results in overall higher returns.

3. Safe and Secure Returns:

FDs are market-proof, meaning your investments remain unaffected even during market downturn. Additionally, FD investments up to ₹5 lakh are insured under DICGC (Deposit Insurance and Credit Guarantee Corporation).

Chances of losing your money is extremely low compared to market-linked investment instruments, like mutual funds, stocks, bonds, etc.

Flexibility and Accessibility:

One often overlooked advantage of FDs is their flexibility. You can choose from various tenure options—from as short as 7 days to as long as 10 years—based on your financial goals and needs.

1. Payout Options:

Receive interest payouts monthly, quarterly, or at maturity according to your cash flow needs.

2. Liquidity:

Need cash for an emergency? You can break your FD. Although there might be a penalty for premature withdrawal, access to funds when needed most is possible.

However, it's always recommended not to break your FD - you may lose out on higher returns for premature withdrawal. Kindly note that this feature is available only for callable FDs.

3. Loans against FDs:

Many banks offer up to 90% loans against the deposit amount without breaking it. So, if you're in urgent need of funds, instead of taking a personal loan, you can opt for loan against FD.

4. Overdraft against FD Facility:

Banks allow you to withdraw funds against the value of your FD. The overdraft limit is set by the bank and depends on various parameters. You have the flexibility to repay the amount in full or in instalments.

Tailoring Your Financial Plans:

The flexibility to choose the tenure and amount makes choosing FD an appealing option for both short-term and long-term investors.

Short-term Goals: Save for immediate goals like vacation or electronics with short-term FDs.
Long-term Savings: Plan for your child’s education or retirement with longer tenures.

Understanding the difference between cumulative and non-cumulative FDs can help you choose the right option based on your needs.

Feature	Cumulative	Non-Cumulative
Interest Payment	Reinvested; paid at maturity along with principal	Paid out periodically (monthly/quarterly, half-yearly, yearly)
Suitability	Long-term growth	Regular income requirement

Easy Monitoring and Operations

Auto-renewal Options: Automate renewing your FD upon maturity to continue earning interests without any hassle.
Online Account Management: You can open a Digital Fixed Deposit and manage your account on the go.

FD Tax Benefits:

Fixed deposits not only help maximise your savings but can offer tax benefits under Section 80C of the Income Tax Act. This makes them an attractive option for tax-saving purposes without risking capital in volatile markets.

However, this benefit is available only with Tax-Saver Fixed Deposits. Additionally, Tx Saver FDs come with a lock-in period of 5 years,

Instrument	Interest Rate	Lock-in Period	Risk Level
Tax-Saving FD	6-7.20%	5 years	Low
ELSS	12-15%*	3 years	High
PPF	7-8%	15 years	Low

*Returns are subject to market risks

This table may help investors compare FDs with other tax-saving options based on potential returns, risk, and accessibility.

Final Thoughts

We've covered why fixed deposits stand out as a prudent choice due to their safety, predictability, and favourable tax considerations among other benefits. Whether you're planning to meet short-term goals or securing your financial future; choosing fixed deposits could be your best move towards stable and safe investments.

Looking to grow your savings? Ujjivan SFB offers a wide range of fixed deposit products. Select the FD of your choice and take a step forward to your financial goals. Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.

Disclaimer:

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FAQs

1. What are the main reasons to choose fixed deposits?

Key FD benefits include guaranteed returns, safety of principal amount, flexibility in tenure, and ease of operation.

2. Are there tax benefits associated with fixed deposits?

Certain types of fixed deposits like tax-saver schemes offer tax deductions under Section 80C of the Income Tax Act.

3. How can choosing FD improve my long-term savings?

By offering steady accumulation through interest compounding over years without market-related risks.

4. What documents are needed when choosing FD?

With Ujjivan SFB, you can open a Digital Fixed Deposit with your PAN, Aadhar details and Video KYC.

5. Is FD interest taxable?

The interest earned on FD investment is taxable as per the Income Tax Act, 1961. The minimum TDS (Tax Deducted at Source) levied on FD interest is 10%. It's applicable only if the interest income exceeds ₹40,000 (for regular citizens) and ₹50,000 for senior citizens. Please note that this TDS exemption on FD interest is applicable for FY 2024-25 (till March 2025). For FY 2025-26, the current TDS exemption limit has been hiked to ₹50,000 for regular citizens and ₹1 lakh for senior citizens.

Top Reasons to Choose Fixed Deposits for Secure Investments and Stable Returns