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There is usually a direct relationship seen between inflation and the deposit rates that are offered for investors.

A fixed deposit has an element of flexibility and accessibility because there is no restriction on the investor taking the money back from the fixed deposit before its maturity. There is one exception in the form of tax-saving fixed deposits that have a lock-in period of five years. For all the other deposits, the investor can access the money any time he/she wants.

Each bank or financial institution that is offering fixed deposits fixes its own deposit rates. The deposit rates depend upon the financial position of the bank and the conditions that impact the fundraising for the institution.

There are several differences between equity investments like an equity share or even an equity-oriented mutual fund and a fixed deposit. There is a risk that the capital amount can be lost in case of an equity investment. This is not the case with a fixed deposit unless the bank or the financial institution goes out of business. Even when a bank fails there is a deposit insurance of up to Rs 1 lakh for every individual and hence there is an element of safety for such deposits.

There are various choices available for an investor when it comes to earning income from a fixed deposit. The earning is in the form of interest that is generated at a specified rate fixed on the deposit.

Fixed deposits form a part of the debt investment of an investor�s portfolio.