When it comes to personal finance, individuals decide where to allocate their funds to achieve their desired goals. Two of the most common and trending options are Fixed Deposits (FDs) and Savings Accounts. The FD interest rates in our country are quite lucrative and beneficial, due to which it is chosen by many. 

Around two months back, I was also planning to invest in the same. Long gone are the days when people actually had to travel to financial institutions using their resources and get things done. Nowadays, it’s just you and your internet-enabled smartphone with the right application installed. 

What is a fixed deposit?

Also known as term deposit or time deposit, a fixed deposit is a financial instrument offered by banks as well as other financial institutions. It is a type of savings account where you deposit a sum of money for a specified period at a fixed rate of interest. Keep in mind that the money deposited cannot be withdrawn until the maturity date, which is predetermined when you open the FD account. 

In India, this investment option is considered a safe investment option because they offer assured returns. You cannot compare the same with investments in the stock market as these are quite volatile. The rate of interest on a fixed deposit is typically higher than that of a regular savings account, making it an attractive choice for individuals looking to earn a stable return. 

(Tip: Always use a Fd calculator before investing. It gives you an estimate.)

What is a savings account?

As the name implies, it is a type of financial account that allows individuals to securely store their money while earning a good amount of interest on their balance. Furthermore, it is designed primarily for the purpose of saving money rather than conducting transactions in a much more frequent manner. 

What are the returns offered on both these investments?

The rate of interest on savings accounts is generally lower compared to other types of investments. This is because they are considered low-risk and highly liquid. However, some online banks and fintech companies, such as Bajaj Finserv, offer high rates. 

(Note: The rate of interest on savings accounts is often subject to change and might be influenced by the policies of the central bank and market conditions.)

When we compare both these investment types, it is clear that FDs generally offer higher Fixed Deposit Interest Rate, making them a much more attractive scheme for individuals to earn higher returns. However, keep in mind that it comes with the trade-off of limited liquidity and the requirement to lock in funds for a specific period. 

However, savings accounts offer lower interest rates, but on the other hand, they offer higher liquidity and flexibility for regular transactions. 

How to invest in both these investments?

Initiating investments is super easy these days. Just download an application on your smartphone, and you are good to go. In my personal experience, I used the Bajaj Finserv application, and I highly recommend it. It is quite easy and simple to use. Also, they have the facility of FD interest rates calculator which’ll help you plan your investment accordingly. 

By Grace