A safe and secure Wealth creation process has always been a long-term exercise and is primarily determined by your asset allocation strategy for your portfolio. As investors you can choose from equities, fixed deposits, gold, real estate, debt, etc. the options are too many! You should ideally allocate your money across different asset classes to ensure you minimize your risk and consistently increase your wealth, month after month, year after year at a rate that beats inflation by a big margin. However, most of the asset classes are becoming increasingly volatile due to a combination of factors – dollar fluctuations, geopolitical unrest, volatility in oil prices, inflation, etc. While most of the asset classes are prone to market volatility and come with their own set of risks, bank fixed deposits (FD) ensure that you get guaranteed returns and they demand very little effort  - all without ever putting your principal at risk. Yes, they are ideal for the lazy investor who just wants to get good returns and does not want to be bothered about having to make frequent interventions.

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Speaking on Bank Fixed Deposit Accounts, Sachin Sikka, Business Head - Retail & Corporate Liabilities at Bajaj Finance said, "Fixed Deposits work on a simple principle — high liquidity and lower risk along with fixed returns. One of the primary advantages of FD is that it protects your capital in the long run and also gives you assured returns. Flexibility is one more important element that makes this asset class an attractive one." Highlighting the liquidity advantage that a fixed deposit account holder enjoys, Sikka said that the tenure of a Fixed Deposit can range from 7 days to 10 years, giving you ample flexibility.

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"Longer-term Fixed Deposits yield higher FD interest rates than short term ones. It just makes much more sense for you to park your money in a 10 year FD to ensure maximum gains on your investment. In today’s digital age, FD can be bought within a few clicks with minimum documentation. One more crucial choice that one has to make is whether to invest in a Bank FD or a Corporate FD. Historically, banks have offered FDs at a significantly lower interest rate as compared to company FDs.  Company deposit rates are generally 50-100 bps higher than well-established bank FDs; senior citizens can earn 25-40 bps more than the normal rates on offer. But, you should choose a company deposit, which has the best credit rating from agencies like Crisil, ICRA among others."

However robust our portfolio might be, it is always wise to safeguard a significant portion of your saving capital. Whether you are risk-averse or a risk-taker, fixed deposits are a form of investment that suits all and hence, ideally, one should have at least 20 percent of their investments in Fixed Deposits. It is one of the best hedging tools that balances your overall investment portfolio. That's why having Fixed Deposits is a sign of a healthy investment portfolio, said Sikka.