Fixed deposits are purely a debt category investment instrument. To open it, a person first has to open up a savings bank account with the respective bank. Most banks prefer it. Then a person can make a deposit with any amount starting from 1000 rupees although the lower limit may vary from bank to bank as per their guidelines. After opening it up it is essential to denote a particular tenure for it. The individual must mention a nominee to whom the maturity proceeds can be given in case of early demise of the investor.

In today’s date most institutions offer interest in the range of 8 to 9 percent on it. Higher rate of interest is given to senior citizens. The interest can grow annually on a compounding basis or it can be taken out yearly or monthly by the investor if he wants a regular flow of income. In that case, the principal will remain the same.

It is also possible to take a loan against a deposit in order to meet immediate cash demands. Most banks offer loan up to 90 percent of the total amount in deposit. The rate of interest in case of such a loan is also extremely low.

Most modern institutions offer Auto Sweep facility in case of deposits of this nature. In this case an amount above a particular limit in a savings account automatically gets transferred into a fixed deposit and earns higher interest. Axis Bank offers Auto Sweep Facility.

As per RBI all fixed deposit to a limit of rupees one hundred thousand is entitled to an insurance cover. That means the deposit will remain safe even in case of a bank failure.

Thus Fixed Deposits are an essential tool needed to create wealth in a stable and safe manner.