FD vs. Future: Should You Still Be Investing in Fixed Deposits?

FD. Fixed Deposit.
Just the name brings a smile to most Indian parents' faces. It's the one financial product they trust blindly, safe, steady, and "beta, risk nahi hai."

But when you say FD to a Gen Z investor?
You'll hear "Ugh, it doesn’t even beat inflation! This is the era of mutual funds, crypto, and high returns!"

So, whether you're team FD or team “no FD ever,” let’s break it down and answer the big question:
Should you invest in FDs or not?

First, What Is an FD?
Fixed Deposit (FD) is exactly what it sounds like.
You deposit a fixed amount, for a fixed period, and get a fixed return.

Simple. No market mood swings. No hidden surprises.
The interest rate depends on the bank or NBFC, usually between 6% to 8%, sometimes more.

Let’s Talk About the Cons First

1. Doesn’t Beat Inflation
This is the biggest criticism and it’s valid.
If inflation is around 6-7% and your FD gives you 6.5%, your real return is almost zero.
You're technically just preserving, not growing your money.

2. Taxable Returns
The interest you earn on FDs is fully taxable as per your income slab.
So if you're in the 30% tax bracket, your 7% FD return suddenly drops to 4.9%.

3. Limited Liquidity
Need money urgently?
You can break your FD, but there’s a penalty and you might lose some interest.

Why People Still Choose FDs

1. Guaranteed Returns
FDs are predictable. Whether the stock market is up, down, or sideways, your return stays the same.

2. Capital Protection
Your principal is safe. For people who want zero risk, this matters more than high returns.

3. Good for Short-Term Parking
If you want to park money for a few months or a year, maybe for a wedding, trip, or new phone, FD is a decent option.

So, Should You Do an FD?
There’s no right answer, but here’s a smart way to think about it:

- Don’t put all your money in FDs, since they are not meant for long-term wealth creation.

- Use them as part of your diversified portfolio, especially if you're risk-averse or want to keep a portion stable.

- If you already have an emergency fund, you can consider putting a portion of that into an FD as long as you’re sure you won’t need all of it urgently.

- FD makes sense if you know you’ll need the money in the next 1–3 years and don’t want market risk.

Bonus: Why FIKAA’s FD is Smarter Than Traditional FDs
What if you could get all the FD benefits without ever going to the bank?
Introducing FIKAA Digital FDs

- Interest rate up to 9%

- Tenure: 1–5 years

- Cumulative and non-cumulative options (monthly/quarterly interest payout or maturity-only)

- Extra benefits for women and senior citizens

- No paperwork. No queues. Just open an FD through your FIKAA app

Final Thought/ The Bottom Line
FDs aren’t outdated, they’re just misunderstood.
They're not wealth creators, but they are wealth protectors.
And sometimes, having a little peace of mind in your portfolio? That’s worth more than chasing big returns.

So no, don’t go all-in on FD. But don’t write it off completely either.

Sapna Mehta

Collaborations & Partnerships team | FIKAA