What is one of the primary advantages of Fixed Deposits (FDs) compared to market-linked investments?

Higher interest rates Guaranteed capital returns Dynamic interest rate adjustments Immunity to inflation

How does the interest payout mechanism work for Fixed Deposits?

Interest is only paid at maturity Interest is determined by market fluctuations Interest can be received on a fixed schedule (monthly, quarterly, annually) Interest is directly reinvested into the stock market

What is the key feature of tax-saving Fixed Deposits in India?

They offer higher interest rates than regular FDs They are exempt from all tax liabilities They fall under Section 80C of the Income Tax Act, offering potential deductions They have a shorter lock-in period compared to regular FDs

What is the significance of Deposit Insurance for Fixed Deposit holders?

It guarantees high returns on FD investments It protects against losses due to market volatility It provides coverage up to a certain limit in case of bank failures It ensures tax exemption on interest earned from FDs

What is a notable drawback of Fixed Deposits, particularly in the context of economic conditions?

They offer variable interest rates They are highly susceptible to market fluctuations They may not effectively counter inflation They have a complex interest calculation mechanism

What is a potential consequence of premature closure of a Fixed Deposit?

Increased interest earnings Tax benefits for senior citizens A penalty fee and potential deduction of earned interest Automatic renewal of the FD at a higher interest rate

How does the taxation policy apply to interest earned on Fixed Deposits for individuals below 60 years of age in India?

Interest income is entirely tax-free TDS (Tax Deducted at Source) may apply if interest exceeds a certain limit Interest is taxed at a flat rate regardless of the amount Tax liability is determined by the individual's investment portfolio

What is a key factor to consider when deciding whether Fixed Deposits are a suitable investment option?

The investor's tolerance for risk The current performance of the stock market The availability of alternative investment options The global economic outlook