Fixed Deposits have Risks too!

Most people thought that putting money in Fixed Deposits is the safest way to keep money growing and it is risks-free. Though I would agree that FDs is one of the safer way to keep your capital, I disagree that FD actually help your money grow, and surely it is not risks free.

And the risks involve is Inflation Risks. With the current FD rate of 3%, putting your money in your FD is actually making it depreciating, though it give the false impression that it actually appreciating with the interest given. Figure wise, yes, it is appreciating, as the bank give out interest to FDs, and the balance figure keep increasing with the interest added. Value wise, No! It is not appreciating, instead it is depreciating as inflation reach 5%. The money you put into the FDs is actually depreciating at a rate of 2%.

So if you think there is putting your money in FDs alone is enough as it is the safest way, better think again!