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Essay On Fixed Deposit

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When it comes to investments, Fixed Deposits (FD) and Recurring Deposits (RD) have been popular for decades. The returns from FDs and RDs are considerably higher than those from savings accounts. Both fixed deposits and recurring deposits enable people to earn a higher interest on their savings. Many people keep only a small amount of money in their savings bank account and invest the rest in term deposit schemes such as an FD and RD.

When it comes to FD vs RD, there are different factors that make them suitable for different people. Despite being term deposit schemes, both fixed deposit and recurring deposit work differently. The working principle of these deposit schemes is simple, most people feel comfortable investing their money as compared to investing in stocks bonds, shares, mutual funds, etc.

Fixed Deposit: An FD is a financial instrument through which people can invest a predetermined amount of money for a period of time to earn interest on their investment. There are two types of Fixed Deposit plans available:

• Non-cumulative FD Plan: In a traditional Fixed Deposit (FD), the principal is invested for the tenure chosen by the investor and the interest is paid back at a monthly, …show more content…

The minimum principal deposit required for an FD and RD also varies for different banks. There are different Recurring Deposit schemes available to people. Some are specific for students, senior citizens, etc. and the interest rate also varies depending on the RD scheme. For the same time period and principal, the interest accrued on an FD is slightly higher than that on an RD. This is because the entire amount earns interest every month in the case of FD but in RD the first instalment earns the interest for the complete duration of the RD and the rest earn after they are

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