1️⃣ Fixed Deposits (FD) today earn roughly 6% depending on the bank and tenure. With inflation rate in India averaging 8%, placing money in a Fixed Deposit leads to a serious loss of purchasing power. FD is similar to Certificate of Deposit (CD) in the US so the analysis is applicable to the US as well, especially during the current period of high inflation in the US.

2️⃣ For example, ₹100 in an FD will grow to ₹106 in one year but things you want to purchase may cost ₹108. Over 20 years, while an FD will grow to ₹321, cost of items would have grown to ₹466. This results in a 31% loss in your purchasing power.

3️⃣ It’s a big trap. In my opinion, FDs provide downside protection and peace of mind for a short term (1-5 years depending on the circumstances), I would not suggest using them to park money in the long run.

There’s no one size, fits all approach. I would love to discuss your goals during a *complimentary* 1:1 session for first 5 people.

▶️ Message me on Instagram to set up an appointment
▶️ Follow, Like, Comment and Share for more content…(read more)

HOW TO: Hedge Against Inflation

REVEALED: Best Investment During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

Best Financial Advice: Why Fixed Deposits may be bad for you

When it comes to managing our finances, it is crucial to make informed decisions that can benefit us in the long run. One common investment option that people often turn to is fixed deposits. While they may seem like a safe and secure option to grow your money, fixed deposits have their drawbacks that should not be overlooked.

First and foremost, fixed deposits offer relatively low returns compared to other investment avenues. The interest rates on fixed deposits are typically fixed and do not fluctuate with market conditions. This means that your money may not grow at a rate that can outpace inflation, thus resulting in a loss of purchasing power over time.

Furthermore, fixed deposits often come with a predetermined lock-in period. This means that once you invest your money in a fixed deposit, you cannot access it until the maturity date without incurring penalties. This lack of liquidity can pose a problem, especially in times of emergencies when you might need immediate access to your funds.

Additionally, fixed deposits are not tax-efficient. The interest earned from fixed deposits is fully taxable, which can significantly impact your overall returns. Other investment options such as mutual funds or stocks may provide better tax benefits, allowing you to save more money in the long run.

Another concern with fixed deposits is their lack of flexibility. Once you commit to a fixed deposit, you are bound by the terms and conditions set by the financial institution. If you need to withdraw your money before the maturity date, you may need to pay penalties or settle for a reduced rate of interest.

One important aspect of investing is diversification. By putting all your money into fixed deposits, you lack diversity in your investment portfolio. This can limit your potential for higher returns and expose you to unnecessary risks. It is always advisable to diversify your investments and explore other options that suit your risk appetite and financial goals.

While fixed deposits may have their disadvantages, they should not be entirely dismissed. They can still be a suitable option for conservative investors who prioritize capital preservation over higher returns. However, it is essential to consider your financial goals, risk tolerance, and explore other investment avenues that can potentially offer better growth opportunities.

In conclusion, while fixed deposits may provide a sense of security, they may not be the best financial advice for long-term wealth creation. Their low returns, lack of liquidity, tax inefficiency, and lack of flexibility make them less appealing to investors seeking higher returns and more diverse investment options. It is crucial to analyze your financial goals, seek professional advice, and explore alternatives that can help you achieve your objectives.