Do you know the disadvantages of Fixed Deposit? These 9 things will come in handy before investing
If you also invest in fixed deposits, then this news is useful for you. Often we have heard people saying that investing in Fixed Deposit is most beneficial and safe. In this you can keep your money risk free. That means the effect of interest received in fixed deposits does not depend on the ups and downs of the market.
But are fixed deposits really that beneficial? Do you not have to bear any kind of loss on this? Is there really no risk on your money? If you have the same question in your mind, then let us clear your confusion and tell you the disadvantages of investing in fixed deposits…
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Fixed Deposit Disadvantages
- Lower return- You usually get less returns on fixed deposits as compared to other schemes. If you invest this money in stock market or SIP, then you will get more interest on it. In such a situation, investing money in fixed deposit can give you loss.
- Fixed interest rate – If you invest money in fixed deposit, then you will continue to get fixed returns for some time. On the other hand, if you invest money in the share market, then you get interest on the performance of the market.
- Lock-in-period – In Fixed Deposit you get a lock in period. Meaning you cannot break FD before maturity.
- Bank does not get interest if it sinks- Suppose you have invested money in fixed deposit. So now when the bank collapses, you get its return without interest.
- Liquidity problem- You have a liquidity problem in fixed deposits. If you break the Fixed Deposit when required, then you have to pay pre-mature penalty on it.