Fixed deposits have been a favorite investment option since ancient times. Today, people's attention has certainly shifted towards the stock market, mutual funds, or other schemes, because there is a possibility of getting a much better return than an FD. But despite these options, people's interest in FD has not ended yet. Along with many schemes, most people have an FD in their portfolio. There are some features of FD that make it better than other schemes in many ways. Know about it here.

No fear of market fluctuations
The biggest advantage of FD is its fixed return. When you invest in an FD, you know from day one how much money you will get on maturity. It is not affected by market fluctuations. Whereas mutual funds and the stock market do not guarantee returns and involve risk. Therefore, for investors who do not want to take any risk at all or want stability in their investment, an FD is an excellent option.

Up to Rs 5 lakh is safe.

Under the rules of the Deposit Insurance and Credit Guarantee Corporation (DICGC), every depositor's deposit amount (including principal and interest) up to Rs 5 lakh in every bank is insured. This means that even if a bank collapses for any reason, your amount up to Rs 5 lakh remains safe. You do not get this security in any other private investment scheme.

Instant liquidity facility in case of emergency
Money can be needed suddenly at any time in life. In such a situation, FD proves to be very useful. You can also break your FD before maturity, although the bank may charge a small penalty for this. Apart from this, another great benefit is that you can also take a loan or an overdraft facility on your FD. You get this loan at a much lower interest rate than a personal loan, and it does not require much paperwork. In this way, your investment remains intact, and your need is also met.

Stability and balance in an investment portfolio

A wise investor never invests all their money in one place. It is very important to diversify the portfolio. FD provides stability to your investment portfolio. When there is a loss in risky investments like the stock market, then the fixed return from the FD gives balance to your portfolio and helps in reducing the total loss.

A 5-year FD is also helpful in saving tax
FD also helps you in saving tax. You can avail of tax exemption of up to Rs 1.5 lakh in a financial year under Section 80C of the Income Tax Act by investing in a tax-saver FD with a lock-in period of 5 years. However, it is important to note that the interest earned on FD is added to your income and is taxed as per your tax slab.

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