Rising FD Interest Rates Make FDs A Reliable Option For Investors: Study

If you are an investor and want to know how to save yourself from market volatility, this article might be helpful for you.

Rising interest rates

What Is Market Volatility?

Market volatility is a term related to investment that represents times when a market experiences problems like uncertainty and sharp price movements. It does not necessarily have to be related to a fall, as it can also describe a sudden rise in the price.

Volatility can be calculated by estimating the rate at which prices rise or fall. To be precise, we statistically calculate it by finding out the standard deviation of the annualised returns of a market over time.

High volatility is when there is a rapid spike or fall in price over a short time, and low volatility is when the prices are comparatively stable or have a slower movement. Company performance and sectoral, political, economic, and industrial factors play an important role in market volatility.

Also read: 4 strategies to handle extreme market volatility

What are the current FD Rates?

Fixed deposits are popular, especially among conservative and new investors, due to their secure nature. For most banks, FD rates are between 2.10% p.a. to 7.50% p.a. for tenures between 7 days to 10 years. Moreover, senior citizens are usually offered an additional interest of 0.50% p.a. to 0.75% p.a. above the usual rates. NBFCs and small finance banks offer the highest interest rates for FDs.

Below are the interest rates for a few popular banks as of 2nd March 2023:

FD Interest Rates in Small Finance Banks

FD Interest Rates Small Finance Banks

FD Interest Rates of Private Sector Banks

FD Interest Rates of Private Sector Banks

FD Rates for Public Sector Banks

FD Rates for Public Sector Banks

Why Fixed Deposits Are A Preferred Choice?

A fixed deposit is the simplest way of investing without risk, as a fixed deposit promises a particular sum of money without inflation or volatility. Fixed deposits attract investors because they are safe and straightforward sources of investment.

A study has shown that half the investors go for fixed deposits when they need money fast and without a loss, and around 23% of the investors go for fixed deposits to combat inflation. (From CNBCTV)

Also read: How to save income tax by investing in FDs?

According to a survey by the investing platform Kuvera, more than one out of five respondents said they turned to FDs to keep emergency funds and beat inflation. Around 12 percent of investors said they chose an FD as it is simple and a familiar investment, while one in 10 invested in an FD to avoid market volatility.


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