What is a fixed deposit account?

A fixed deposit account (FD) is an account with a fixed interest rate applied by the financial institution where the account is held. In exchange, bank customers commit to maintaining the account balance with the bank for a fixed period of time.

Is a fixed deposit a safe investment?

A Fixed Deposit is a safe investment through which you can earn interest income. Fixed Deposits promise guaranteed returns and involve no risk of loss of principal amount. Returns on Fixed Deposits are unaffected by market fluctuations. All interest gains from Fixed Deposits are taxable by law.

When is interest paid on a fixed deposit?

In a fixed deposit, interest is only paid at the very end of the investment period. Since the investment term and interest rate are fixed, you can easily calculate the interest you will earn at the end of any fixed deposit investment. How do fixed deposits work?

What is the difference between a fixed deposit and a debenture?

Fixed deposits are a type of product offered by a bank with a fixed interest payout. Debentures are unsecured debt instruments issued by businesses to raise capital funding, and with more complex structuring provisions than fixed deposits. The debenture may include fixed or floating interest, and they may be either convertible or nonconvertible.