Topic: How does a fixed deposit account work?

Is it a good investment and what are the pros and cons?

Fixed rate deposit accounts are generally a very low rate of return, anywhere between say 1% and 5%. A one year is going to give you a higher return that shorter term account, but is still going to have a fairly low rate of return, say probably close to 2.5% or so. Whether it is a good investment is completely predicated on your risk profile, expected return, diversity of portfolio, etc. However, I can tell you that with low return should come low risk. Therefore, they are good if you are looking for a low risk investment, but you should not expect any significant return.

Pros -

Low risk
Regular income
Availability of loan
Save tax

Cons -

Erosion of worth of capital due to inflation
Tax liability

So if i have to get more returns what is best option ??
Shares, Mutual funds, Gold ?

Actually I also wanted to know the process of fixed deposit accounts. Definitely there is financial security and fixed amount will gets on our fixed deposit investments but what is risk in this type of investment?

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