Do you know how does fd work?
I don’t think it’s a complex concept but okay. Since you’ve asked how does fixed deposit work, let me simplify. A fixed deposit is an investment scheme. As the name suggests, you deposit your money for a fixed time duration as an investment. This deposit helps you earn interest as per the agreement between you and the financial institution at the time of making this deposit.
Here is all that you get out of a fixed deposit investment:
- Guaranteed returns
- Flexible interest options
- Higher interest as compared to savings accounts
- Principal + interest at maturity
Some banks also offer flexibility to withdraw FD prematurely. There is also an option to get payouts either monthly, quarterly or annually. You can make the choice and understand the associated terms.
This is pretty much it. Let me know if you have any more questions.