Fixed Deposit

A fixed deposit (FD) is a financial instrument offered by banks and financial institutions that allows investors to deposit a lump sum of money for a fixed period at a predetermined interest rate. Fixed deposits provide higher interest rates than regular savings accounts and are considered low-risk investments. Upon maturity, the principal amount and accumulated interest are returned to the investor. FDs are popular for those seeking stable returns without exposure to market volatility.

Example

An individual invests in a 1-year fixed deposit with a 5% interest rate, ensuring a guaranteed return at the end of the term without the risks associated with market fluctuations.