FD Investment Risk: Is FD a completely safe investment? Thinking like this is wrong because there is a danger of drowning money in it too.
FD Investment Risk: Fixed deposits have long been considered a safe investment option and hence remain the preferred option for risk averse investors. However, in reality this is not the case and there is a risk on investing in this and you can lose your capital. In such a situation, understand the risk associated with investing in FD so that you can take proper decisions regarding your capital.
risk of bank default
The biggest risk involved in investing in FDs is bank default. If an investor has defaulted in the bank in which the FD has been made, then only Rs 5 lakh of his investment will be safe, he will be able to get back because in the event of the bank sinking, only this insurance remains. For example, suppose an investor has made an FD of 10 lakhs in a bank and that bank has sunk, then in such a situation only Rs 5 lakh will be available.
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No withdrawal before maturity
Money is invested in FD for a fixed period and only after this period you can withdraw money. However, if you have got an FD and withdraw it before the stipulated period i.e. maturity, then you can suffer huge losses because you will get returns after deducting some charges on it.
Offline withdrawal requirement
Some banks do not provide the facility of online processing for withdrawal of FD in case of maturity. In such a situation, you have to complete the whole process by going to the bank. Usually such a problem occurs when you have started an FD by going to the bank, that is, if you have taken an FD five years ago, then you will have to go to the bank on its maturity today.
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Negative returns due to inflation
There is a big risk of investing in FDs, that is, the rate of increase in inflation. It can be understood that now inflation is around 7 percent and if a bank is giving interest on FD at the rate of 6 percent, then it means that you are not getting return on investment because you are getting negative one percent (7-6) Getting returns.
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FD tenure
After the increase in the repo rate by RBI, banks are also increasing the FD rates. There is a possibility of a hike in rates going forward, so if you have already put a lot of capital in FD for a long time, then you will not be able to take advantage of the rising rates. Conversely, if the rates are expected to come down in the future and you have taken an FD for a short period of time which is to mature at the time when the rates have come down, then the return on putting the money from the matured FD back into the FD Will get less So choose the tenure of the FD carefully.
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