What is an FD (Fixed Deposit)?

# A [Fixed Deposit](https://datesfinserv.com/fd-vs-life-insurance/), often referred to as an FD, is a secure investment instrument offered by banks and financial institutions. # How an FD Works You deposit a lump sum of money for a fixed tenure, and the bank pays you interest at a predetermined rate. Once the tenure ends, you receive the principal amount along with the accrued interest. # Benefits of an FD * Guaranteed returns * Low risk * Flexible tenure options * Easy liquidity in emergencies (with penalties)