Never Make Such Mistakes While Investing In Fixed Deposits

Most peeps want to invest where there is a guaranteed return, safer, and money will grow slowly. Yes, banks always have an option!!

It is correct to invest where it is safe, and the fixed deposit offers you this safety.

FD is one of the most famous traditional ways of investment and also a successful way to grow money. You will find several investment options, but a fixed deposit is something that provides assured returns.

You will find many blogs explaining the fixed deposit and several other investment options.

In this blog, you will find some of the silly mistakes that everyone commits while investing in fixed deposits.

Neglecting premature withdrawal penalty

While investing, it is wise to check what withdrawal facilities are available. Usually, every bank provides a premature withdrawal facility to consumers with penalty charges or any other penalty as per the policy.

For example, if you have invested money for three years, but due to some health emergency, you need to withdraw all amount, the bank will allow you to withdraw the amount with specific penalty charges like 1%.

“It is always wise to know the way to get out before entering.”

Neglecting the safety aspects

It is important to fully understand that whatever the amount that you deposit is insured in the bank.

If you invest a huge amount in the bank, private or non-private, the basic thing to know the maximum insured amount if the bank fails.

Last year, i.e., 2019, the PMC bank fail and DICGC(Deposit insurance and credit guarantee corporation) insured a maximum of 1,00,000 rupees amount, which was later refunded to each depositor.

Now, as per the budget 2020, DICGC has raised the amount to 5,00,000.00 rupees, which insured a maximum of five lakh rupees.

Ignoring penalty charges on fixed deposit

Did you know the interest you earn on FD is taxable?

To understand this, you will have to pay taxes, i.e., 10%, once your interest amount crosses 40,000 rupees in a fiscal year. It is important to avoid such types of charges, and therefore, I can advise calculating the interest amount before investing.

You will be taxed if the interest amount crosses 40,000.00 rupees and the age is below 60 years.

  1. If you have more than one fixed deposit in a bank, the tax will be applicable to all FDs’ total interest amount.
  2. If you have FD in different branches, but of the same bank, tax is calculated on all FD’s total interest amount.

It is wise to calculate the interest amount before investing in the FD. If the amount crosses the bar, it is better to divide the amount.

The rules are similar for the senior citizen (Above 60 years), only the interest amount is 50,000.00 rupees.

Who should go for the Fixed Deposit plan?

Fixed deposit is one of the best plans as it is away from all the market risks; it provides an assured interest amount and is a perfect type of investment. This investment is suitable for:

  1. An individual who has surplus cash at hand currently and would like to invest money without exposing to market risk.
  2. Retirees who rely on interest and pension income.
  3. An individual who has a short term goal plan.
  4. People who are planning a retirement plan.

Some drawback of Fixed Deposit

As every coin has two sides, so has FD. Thus, it is crucial to be aware of drawbacks. For instance, the earnings made on fixed deposits are not inflation-adjusted, and they bring more taxation annually. These make a fixed deposit a less popular option for creating wealth. However, FD investments are wholly reliable and secure returns irrespective of the market change.


In conclusion, I want to say that if you have some spare cash in your hand and do not need it instantly, you should park it into an FD. Doing so, you will save your capital and also earn a uniform return on the same.

More or less, investment is always tricky. No investment is bad or good. It is all about choosing the right investment at the right time, looking at the market condition, a clear goal about the reason for investment, and a perfect plan that suits your requirement.

Do proper research! Be wise! Happy investing!