A term deposit and a fixed deposit (FD) are two different types of investments that involve depositing money into an account at a financial institution. Term deposits usually have short-term maturities ranging from one month to a few years, while fixed deposits are for a period of six months or more. Both offer a higher interest rate than other trading accounts, but there are some key differences to consider when deciding which one is right for you.The main difference between a term deposit and a fixed deposit is the length of time you are committing to. With a term deposit, you can choose the length of time you want to invest your money for, such as 3 months, 6 months, etc.
On the other hand, with a fixed deposit, you are committing to a longer period of time, usually six months or more. This means that if interest rates rise during this period, you won't be able to withdraw your money and invest it in an account that offers higher interest rates.Another difference between the two is that with a term deposit, you can withdraw your funds after the term ends without any fees. However, with a fixed deposit, there may be fees charged if you decide to withdraw your funds before the term ends. This means that if you need access to your money before the end of the term, it may be better to opt for a term deposit.Finally, when investing in either type of account, it's important to understand the risks involved.
With a term deposit, there is interest rate risk if investors are stuck in an account with a low interest rate while overall interest rates rise. With fixed deposits, there is also the risk that the rate offered may be lower than the rate offered for a fixed term.Overall, both term deposits and fixed deposits offer investors an opportunity to earn higher interest rates than other trading accounts. However, it's important to understand the differences between them and consider how long you're willing to commit your money for before making a decision.