- FDs are opened in banks for fixed periods (Usually 3 to 5 years)
- The Money invested in a fixed deposiot grows at a rate of interest decided by the bank.
- The Money is payable at the end of the Fixed term.
Pros
- The rate of interest is fixed.
- The investment is safe in a nationalized bank or Post office.
Cons
- The growth is restricted by the rate of interest.
- Premature withdrawal of FD attract a penality.
- The rate of interest is low and barely manages to beat inflation.
