Fixed Deposits: The Anchor of Your Portfolio

While the stock market offers high returns, it comes with high risk. The **Fixed Deposit (FD)** remains the safest investment vehicle in India, offering guaranteed returns backed by the DICGC (Deposit Insurance) up to ₹5 Lakhs.

How "Growth" (Cumulative) FDs Work

In a **Cumulative FD**, you do not receive interest payouts into your bank account during the tenure. Instead, the interest is **re-invested** (added back to the principal) every quarter.

This utilizes the **Power of Compounding**. Since your principal grows every quarter, the interest you earn in the next quarter is calculated on a higher amount, leading to a significantly larger maturity value compared to a standard payout scheme.

Important Tax Rules (TDS)

• TDS Deduction: Banks deduct 10% TDS if your interest income exceeds ₹40,000 in a financial year (₹50,000 for Senior Citizens).
• Form 15G/15H: If your total income is below the taxable limit, submit these forms to the bank to avoid TDS deduction.
• Tax Saver FD: Invest in a 5-Year Tax Saver FD to claim deductions under Section 80C (up to ₹1.5 Lakh).