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What is Fixed Deposits?

Fixed deposits describes an investment vehicle, usually some kind of debt instrument, that has a fixed time period of investment.

With a fixed-deposits investment, the investor parts with his or her money for a specified period of time and is repaid his or her principal investment only at the end of the investment period. In some cases, even though a fixed deposits is stated on the investment, the investor or issuer may not have to commit to it.

fixed-deposits investment is a term deposit in which the investor deposits his or her funds with a financial institution for a specified period of time and cannot withdraw the funds until the end of the time period, or at least not without facing an early withdrawal penalty. The investor, for the most part, is committed to the fixed deposits of this financial instrument.

Key Takeaways

  • Fixed term refers to a financial instrument in which an investor's funds are locked for a predetermined period of time. Investors are paid back their principal at the end of that period.

  • Examples of fixed terms include term deposits and bonds.

  • Depending on the type of instrument, investors may or may not be able to withdraw their funds. In both cases, however, they can do so only after a specified period.