A Fixed Deposit (FD) is a financial instrument provided by banks which provides investors a higher rate of interest than a regular savings account, until the given maturity date.
How it Works
You deposit a lump sum amount for a fixed tenure (ranging from 7 days to 10 years). The bank pays interest at a fixed rate. The interest can be paid out periodically or reinvested (cumulative FD) to benefit from compounding.
Safety
FDs are considered one of the safest investment options. In many countries, bank deposits are insured up to a certain limit by the government.