FD Interest Rates 2021: Should you Invest in Fixed deposits?

There are quite a few investment options available to us in the form of mutual funds, stocks etc. The best investment option in India depends on two factors: Investment Objective and Type of Investment.

Out of all these, which investment options do we opt for? Yes, you are right. Fixed deposits and Life Insurance are common investment avenues, which help us to save money. The main difference between the two lies in the fact that the former is an investment, suitable for short-term investments, and the latter is more of a risk cover, which is long-term, extending up to a lifetime. So, what happens if we get both merged into one single unit?


Today as we stand in the face of the pandemic, we all have learned our lesson to not just save but to salvage and economize more. Our economy is mostly consumption-based with almost 60% of our GDP coming from intake in households. However, it is not difficult to understand that Indians have traditionally been savers. We always want to secure our future by preserving our income. This also explains our low risk-taking nature and our investment patterns which were a result of a far-sighted vision. Even in this current havoc situation, we as Indians, are saving more and more despite layoffs and financial stress. It seems that we have finally realized the importance of budgeting. 

‘Desperate times calls for desperate measures’ – it suits perfectly with the context of investigating our finances, reorganizing our investments, scrutinizing our savings, and thinking elusive about how we can diversify our saving portfolio with low risk. The most baffling part of building a financial statement is understanding which instruments fulfill our needs. The fact that almost every single person has some form of monetary advice/suggestion for us, which does not always help the cause. There are very few financial instruments in these fluctuating marks which are essential for every saving portfolio. One such plan must be a Fixed Deposit.

While there is a lot that has been said about this traditional model of investment, it still stands as one of the smartest choices that need to be in our saving plan. One of the biggest benefits that every investor will get is FD compounding. With time, your investment gain returns, and the yields on these returns could further generate returns; thus, helping to increase the value of investment quickly. 

Fixed Deposits: A Risk-Free Investment

It is always important to compare the latest fixed deposit rates among leading banks in India before opening a new fixed deposit or renewing an existing one. THE AVERAGE FD RATE IN INDIA IS 5.5%. As of July 2021, the average fixed deposit interest rates offered for tenures ranging from 7 days to 10 years, for deposits below Rs. 2 crores of major financial institutions, like YES Bank, is 6%.

There are few arguments against investment in Fixed Deposits stating that some variable income investment instruments yield higher returns. The variable income instruments such as Equity Shares, Mutual Funds, and Derivatives instruments can provide higher returns but there are very high risks associated with it. The risk tolerance of an investor guides the investment decisions. For higher returns, there is always a high-risk element, which can also mean losing a huge part of the money at any point of time in adverse market situations. An ideal investment portfolio is a risk-free investment as per the risk tolerance capacity and risk averseness.

In addition to all this there are several other benefits of having FD in your portfolio OF Investment. Some FD like that of HDFC AND POST OFFICE comes with the loan facilities that give you easier access to funds at any time. Fixed Deposits offer loan facility of up to 75% of deposit available from all Branches, making sure that your FD also has your back in case of any urgencies. 

FD with Additional Benefits

The added advantage shouldn’t be missed at any expense. People depending on your income, life insurance will replace that income for the loved ones if you die. The most recognized case is that of the parents with young children. However, it can also apply to couples in which the survivor would be financially weakened by the income lost through the death of a partner, and to dependent adults, such as parents, siblings, spouses, or children who continue to rely on you financially. Insurance helps to replace your income can be especially useful if the insurance company-sponsored benefits of your surviving spouse or domestic partner will be reduced after your death.

So finally, we can conclude that the FD rates have both pros and cons and may or may not suit every individual who is responsible for his financial and family life.

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