What is the risk of fixed deposits?

Fixed deposits (FDs) generally carry low risk, as they offer a guaranteed return and are typically insured up to a certain limit by government agencies. However, the main risks include inflation risk, where the returns may not keep pace with rising prices, eroding purchasing power. Additionally, if funds are locked in for a long period, there’s a risk of opportunity cost, as better investment options may arise. Lastly, in case of bank failure, the amount above the insured limit can be at risk.