why fixed deposits may never make you rich

why fixed deposits may never make you rich

before we jump the gun, let’s get the basics sorted.
there is no denying that fixed deposits are one of the safest investment instruments that you can get your hands on. but there is a catch (there always is).
before we dive into the heart of the matter, let’s build the case by looking at some of the long-term pitfalls of investing only in fixed deposits (FDs):

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1. inflation significantly erodes values
fixed deposits are most likely to only get you your money back. the keyword here is ‘at most’. while a return of 7-8% may look lucrative on the face value, most of the investors forget to account for value erosion due to inflation. use CRED's financial calculator to find your estimated return on investment.

2. penalties on exits before maturity
however comprehensive your investment plans be, there is always a high chance that you may need to dissolve your FD before your maturity period. most of the banks levy a penalty of 0.5% - 1% in such cases. on top of this, your applicable interest rate may also change.

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