Risk and return are inversely related in most investment cases. However, fixed deposits are less risky and offer good returns.
Mumbai . Each investment medium has its own advantages and disadvantages, which need to be kept in mind before investing. It is best to invest in the medium with the highest interest rate for maximum returns. Along with this, how much risk is there in which investment is also an important point. In most situations, risk and return are inversely related. However, fixed deposits are less risky and offer good returns.
Bank
Bank FD account is the most common and traditional investment option among investors. Also, it is the most subscribed medium of FD in India as compared to NBFCs and Post Offices. The interest rate offered by commercial banks on FDs is monitored by the Reserve Bank of India (RBI). RBI’s cut in repo rates has reduced the interest rates offered by banks. As a result, the return on maturity of the money gets reduced.
NBFC
In India, FD interest rates are governed by the rules of RBI. In case of NBFCs, RBI does not have a direct watch on NBFCs. Generally, changes due to reduction in policy rates have less direct impact on them. As a result, FDs from NBFCs are more attractive than FD plans offered by both banks and post offices. NBFC FDs can be the best option due to their high FD rates, though there is a high risk involved.
Post office
Apart from banking institutions, post office fixed deposits are another option. The post office also comes under the Government of India. Post Office India offers fixed deposits with excellent interest rates and terms ranging from one year to five years. Interest is paid annually, with a minimum deposit amount of Rs 1,000. It is safe because it comes under the government. Anyone can invest in these FDs, except NRIs.
Any kind of investment, be it in FDs or regular deposits with banks, NBFCs, or post offices, should be made after considering various factors like interest rate, risk, lock-in period and other factors. Investing without any research can damage your capital.
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