Why investors are steering towards the humble fixed deposit?

ArticleWhy investors are steering towards the humble fixed deposit?


Why investors are steering towards the humble fixed deposit?

Amid increasing market volatilities and an economic slowdown, investors have begun to choose safer investment avenues, prompting a flight-to-safety. The need to de-risk is greater than ever, as the focus has gone towards keeping adequate liquidity to tide over emergencies. These changing market dynamics, coupled with need for convenience in the times of digital ubiquity, have intensified the need for investments offering convenience, and assured returns.

There is no better time than now, for financiers to tap into this need of consumers, and facilitate convenient and smooth investment processes.

Why digital investment processes are need of the hour?

In today’s increasingly uncertain world, constantly keeping up with updates on changing economic policies, volatility spikes, and monitoring your investments can be tricky. Additionally, investors have begun to look for digital solutions, rather than investing in the old-fashioned way, with regular trips to branches, or post-offices.

Swinging stock indices have also necessitated the need for certainty, in terms of returns. But, instead of visiting investment advisors, there is a need for tools like the fixed deposit calculators that enable you to compute returns beforehand. Providing digital access to investors can also help them take control of their investments, while tracking their payouts and maturity dates.

Deposits become popular, as markets turn volatile

With more investors choosing flight to safety, simpler fixed-income instruments offering assured returns, are back in focus. However, with lowering of interest rates for savings schemes and provident funds, fixed deposit has become a preferred investment avenue.

Both banks and NBFCs can accept deposits, but those seeking inflation-beating returns can consider investing in a NBFC FD (also known as company FD). It is important to ensure you choose a safe company FD, with high safety ratings. With uncertainty looming on the investment landscape today, investors have started taking a cue from the past, by moving towards fixed deposit.

Amid increasing market volatilities, fixed deposit offers the assurance of guaranteed returns, flexibility of process and the option to customise investments as per the investor’s choice. FD works best for all investors, regardless of risk appetite. It is particularly helpful for senior citizens, who can generate periodic income with their corpus.

Digital solutions make investing in deposits easier

Fixed deposit offers a great balance of convenience, safety and assured returns. Those who wish to access their savings easily, can avail online FD facilities to invest from the comfort of their homes. Deposit holders can also track their investments digitally, with no need for constant monitoring. In case of emergencies, deposits can be liquidated or a loan can also be availed against deposits. These days, several financiers have also digitized their branches, offering digital solutions to suit the needs of different customers.

Financiers have also begun to dovetail fixed deposit features, as per the needs of different investors. A case in point is the introduction of Systematic Deposit Plan – an industry-first saving option to help regular savers. With Systematic Deposit Plan, savers can grow their savings on a monthly basis with deposits starting Rs. 5000. Thus, this option enables investors to enjoy the convenience of SIPs with the assurance of guaranteed returns.

Offerings like these, have further exacerbated the flight-to-safety, as reports reveal 33% growth in flows to fixed deposits. This growth is massive, as compared to growth of 8% in 2019. Thus, the integration of digitalization has made fixed deposit preferable, as an investment avenue during the current times.   

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