For secure investments, Public Provident Fund and Fixed Deposit are great options. You should choose one based on what you need.  Out of these two investment options, fixed deposits are often a preferred choice for busy salaried professionals who do not fall in the higher taxation brackets.

Fixed Deposits have been a favourite due to specific reasons. They offer guaranteed return with minimal risks. Also, if you invest in a 5-year fixed deposit, you get a tax benefit. Post demonetization initiatives in India, fixed deposit interest rates have somewhat fallen, although they still offer a highly attractive rate considering their liquidity. It is very easy to encash your fixed deposit. In case, the Fixed Deposit is not due for maturity, you can take a loan against the investment you made.While a PPF gives you an 8% return (only 0.5% higher return) and is locked, fixed deposits offer around 7.5% returns (as of March 2017). Opening a fixed deposit is a simple process. Fill in the application form along with your KYC form and you can begin operating your Fixed Deposit. You can fix the tenure ranging between 7 days to 10 years. If you choose a savings account linked to your fixed deposit, the surplus is automatically transferred to the fixed deposit account leading to higher returns for you.

Fixed deposits fall under the safest instruments. This is because fixed deposits are covered by deposit insurance. Even if you have to de-invest the fixed deposit due to urgent financial needs, you just lose some marginal interest. Despite fluctuation in the interest rates, you get the amount that you have been promised. In case, you are planning to invest now, you can visit an online fixed deposit calculator, which provides real time insights to what your investment options could be and the benefits you may accumulate from it. Some comparative pros and cons are often discussed in details in our blog.

Most of the banks like Axis Bank, State Bank of India etc., provide opportunities to invest in fixed deposits from your internet banking account. Moving your finances from a saving bank account to a fixed deposit account, is a matter of a few clicks. The reverse of that, i.e. disinvesting from the fixed deposit to your savings bank account equally convenient. Due to its high liquidity and very high accessibility, investors often prefer to invest in fixed deposits.

A fixed deposit in all practical ways is an extension of your savings bank account. It can be obtained within a day without any hassle.

By Kar

Dr. Kar works in the interface of digital transformation and data science. Professionally a professor in one of the top B-Schools of Asia and an alumni of XLRI, he has extensive experience in teaching, training, consultancy and research in reputed institutes. He is a regular contributor of Business Fundas and a frequent author in research platforms. He is widely cited as a researcher. Note: The articles authored in this blog are his personal views and does not reflect that of his affiliations.