What is Fixed Deposit ?

What is FD ?

FD stands for Fixed Deposit. It is a type of investment scheme offered by banks and other financial institutions in which an individual deposits a fixed amount of money for a fixed period of time, and earns a fixed rate of interest on it.

In an FD scheme, the interest rate offered is generally higher than that offered on a savings account, and the investment period can range from a few months to several years. The interest earned on an FD account is generally compounded quarterly, which means that the interest earned in each quarter is added to the principal amount, and interest is then calculated on the new amount.

FDs are considered to be a safe and secure investment option, as they are offered by banks and financial institutions that are regulated by the government. The returns on an FD are relatively low compared to other investment options such as mutual funds or stocks, but they offer guaranteed returns and are suitable for individuals who want to earn a fixed income without taking any risk.

At the end of the investment period, the investor receives the total amount deposited along with the interest earned. However, if the investor withdraws the money before the maturity period, there may be a penalty or a lower rate of interest applied.

Overall, FDs are a popular investment option for individuals who want to save money for a specific financial goal, and who prefer a fixed and predictable rate of return on their investment.

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