For many years, investors often considered fixed deposits (FDs) primarily for senior citizens, viewing them as a conservative investment choice for retirees seeking stability. However, this perception is changing as more young investors recognise the benefits of FDs in building a well-balanced financial portfolio. Contrary to popular belief, FDs are not just for seniors—they can play a crucial role in financial security for millennials and Gen Z investors as well.

"While fixed deposits may not be the most appealing option for young investors today, it would not be right to completely exclude them from one’s portfolio. FDs still serve an important purpose—especially when it comes to building an emergency fund. This is money set aside strictly for emergencies involving oneself or immediate family, and FDs provide the safety and assured returns ideal for that purpose. They can also work well for very short-term goals, where capital preservation matters more than high returns," said Amit Suri, CFP® – Founder of AUM Wealth.

However, young investors today also have access to other low-risk options, such as certain debt funds or arbitrage funds, which can serve similar needs with added tax efficiency. "With the increasing popularity of mutual funds, many young investors have forgotten about fixed deposits (FDs). For a young investor, FDs can be a smart move for making strategic investments," said Saurabh Bansal, Founder of Finatwork Investment Advisor, a SEBI-registered investment advisor (RIA). He highlights several key reasons why FDs deserve a place in a young investor's portfolio:

1. No Market Volatility: FDs provide stable returns irrespective of market conditions, offering peace of mind.

Key Considerations When Investing in FDs

Before investing in FDs, it is important to consider the following factors:

• Interest Rates: Not all banks and financial institutions offer the same rates, so a comparative analysis is essential.

While fixed deposits (FDs) have traditionally been favoured by the older generation, they also hold value for younger investors. They offer a reliable and stable foundation for building a secure financial future. Ultimately, investment decisions should align with individual goals, time horizons, and financial circumstances—not just prevailing trends.