Fixed Deposits

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Fixed deposits (FDs)

Fixed deposits (FDs) and bonds are both investment options that offer fixed income. However, they differ in their purpose, returns, and risk.

Fixed deposits

  • A bank-based investment where you deposit money for a fixed period of time at a fixed interest rate
  • FDs are known for being safe and predictable
  • FDs are a good option for investors who want stability and guaranteed returns
    FDs are insured up to ₹5 lakh
  • FDs are a good option for conservative investors and those with short to medium-term financial goals

Bonds

  • A debt instrument issued by companies or governments to raise capital
  • Bonds are market-linked debt instruments offering variable returns
  • Bonds are a good option for investors who want higher returns and diversification
  • Bond risk can vary significantly based on the issuer’s creditworthiness
  • Bond prices can fluctuate based on interest rate changes
  • Some bonds, especially tax-free bonds issued by government entities, offer tax advantages
  • Both FDs and bonds are considered safe fixed-income investments, but they are not completely risk-free.
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