Fixed deposit means that is a term deposit with a higher interest rate compared to the regular savings account and because of the high interest rate it will be at low risk, it is one of the most popular investment options in India. The interest rate is fixed for the entire period and is generally considered as an extremely safe investment.

In the fixed deposit Interest rates will vary from bank to another bank and also in the maturity period generally a longer period means a higher interest rate. The interest is compounded quarterly (every 3 months) in most banks. Fixed deposits have very low liquidity, and, you are not supposed to withdraw any amount (however you could take loan at low interest rate @ 1% or 2%) before the due date.

If you do, a penalty may apply and the interest rate will be reduced.You also have to pay taxes on interest during an financial year,depending on your tax range. For long-term need, you could also look for some alternatives like "PPF" it is very secure and have tax benefit too and "SIP" investing in capital assets is risky, but has potential to generate greater long-term profits.

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