5 reasons why Fixed Deposits are favored by the Indian middle class

2 MinsJune 30, 2023

Jay had just got his first salary, and he was filled with excitement. He eagerly shared the news with his dad, who became emotional and promptly suggested that Jay should begin saving. His dad advised him to consider investing in Fixed Deposits, to which Jay retaliated that he would invest in the stock market. His dad explained why FDs hold a special place as a favorite investment option for many Indian middle-class families.

How to plan finances in the post-retirement phase of life

Indian middle-class families have limited income but boundless aspirations for a better future. To fulfill their dreams, they strive to spend less and save more. When it comes to investing their hard-earned money, they seek options that provide assured and profitable returns. In fact, a 2017 survey conducted by SEBI revealed that 95% of Indian families prefer FDs as an investment choice.

Guaranteed and profitable returns on investment

As the name suggests, a fixed deposit is invested for a fixed tenure at an agreed rate of return. When you invest in FD, the interest rate is known, and you will earn that return under any circumstances.

Unlike some other investment options, FDs provide clarity and certainty. You can use an FD Calculator to know the guaranteed interest amount and maturity value based on your investment and tenure.

Axis Bank offers the most competitive FD interest rates for all short-term and long-term goals and also for tax savings. A fixed deposit can be opened with a minimum investment of ₹5000 and provides easy transfers from your savings account. Tax-saving Fixed deposits can be started with a minimum investment of ₹100 to a maximum of ₹1,50,000.

Risk-free investment

FDs are not linked to the market; hence they are very safe. The principal amount invested in an FD will be returned on maturity. Hence there is no risk of losing the principal amount, and to add to it, FDs are issued by banks and financial institutions regulated by the RBI.

There is no volatility in the investment, and you will receive the promised sum on maturity. As a result, risk-averse investors favor FDs.

Investment with flexible duration

Investing in FD comes with another benefit: it can be invested for varying tenures, ranging from 7 days to 10 years. So you can have an FD for every financial goal, short-term or long-term.

With varying durations, you can plan the withdrawal as per your life events, say you have to pay for college fees in 5 years; you can invest a lump sum or in installments in an FD today with a maturity of 5 years.

An investment that serves as emergency fund

Emergencies are events that are mostly unpleasant and require immediate action. A fund that can handle monetary stress can help you concentrate on other things. Fixed deposits can be a good emergency fund, as liquidating is easy.

Investments that incentivize senior citizens

Fixed Deposits are attractive to senior citizens because they are safe, easy to understand and hassle-free. However, what makes them even more appealing to senior citizens is the higher interest rates they offer. This motivates senior citizens to deposit their hard-earned retirement corpus in fixed deposits. It is a match made in heaven as senior citizens look for risk-averse options, and FDs offer just that.


Also Read: [Five Advantages of a Fixed Deposit]


Fixed Deposits are risk-free investments and provide steady returns and growth. For Indian middle-class families, FDs are a go-to investment because they are simple and easy to understand. Any investor with basic banking knowledge can easily invest in FDs.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision