It is advised by all the investment advisors to have a “Portfolio of investments” !. By having a variety of items in the investment basket the risk is also managed. Fixed Deposit is a portfolio type which you can use.
• Guaranteed FDs. Most of the corporates don’t guarantee the investor on their FD’s. It is advisable to split the deposits in different institutions. Starting from Banks to the Financial companies. There are some banks in the country which give Government Guarantee for their deposits. But these FD rates are lesser than what is in the market.
• Know your needs. Generally Fixed Deposits are for a fixed period of time. 1 month, 3 months, 6 months or 1 year 2 Year. Know your needs and deposit appropriately. As pre mature withdrawal will have a penalty whereby you loose the benefits you desire to get.
• Match the Period. Divide your needs to Short Term, Medium term and Long term. If you are saving to buy a land or House this can be a Long term investment. In case you are planning to go for a Vacation in six months this is a Short or Medium term need. So you can deposit in a Fixed Deposit which you can withdraw in six months.