Many individuals prefer investing their money in fixed deposits (FDs). Wealth planners often recommend avoiding this especially if the goal is to achieve maximum returns. However, for someone not looking to take market-related risks, a bank FD works best, they say. Investment in a bank FD or fixed deposit entails fixed, pre-determined returns over a certain lock-in period. Although most banks today do offer FDs with the provision of early withdrawal, doing so with an equity-related investment - such as investment in mutual fund - opens the possibility of earning a higher return. But with higher returns comes added risk, say experts. Bank FDs are best suited for investors with low risk appetite, they add.
(Also read: When to pick mutual fund over bank FD?)
Most leading banks today, from public sector State Bank of India (SBI) to private sector peers HDFC Bank and ICICI Bank, offer an interest rate ranging from 6.6 per cent to 7.35 per cent on fixed deposits of a one-year term, according to an analysis of interest rates displayed on their websites.
Here are the interest rates offered by SBI, HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank on fixed deposits up to Rs 1 crore:
State Bank of India (SBI)
ICICI Bank
HDFC Bank
Axis Bank
Kotak Mahindra Bank
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