What Is a Fixed Deposit?

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A fixed deposit is a deposit made to a bank with the agreement that the depositor will not withdraw the money for a set period of time. Certificates of deposit, or CDs, are a common form of fixed deposits. Invest in fixed deposit to make a set amount of interest with advice from a financial consultant in this free video on money management and personal finance.

Part of the Video Series: Money Management & Personal Finance
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Video Transcript

Do you have excess cash in your savings account or checking account? Has your broker or banker called you, suggesting that you put your money into a fixed deposit? Hi, this is Roger Groh with Groh Asset Management. Today, we're here to talk about fixed deposits. What are they, and what does that really mean for you? Well, what you've...if you agreed to do a fixed deposit, what that means is you've agreed to tie your money up, meaning you may not be able to get your money without significant penalty for a period of time. It could be for a day, it could be for an hour, it could be a year, it could be for 30 years. You have your choice. There are all sorts of products that would fall under this types of category. Typically, the biggest one is certificates of deposit. The rates of return are going to differ significantly depending upon the bank involved and depending upon the length of maturity involved in a fixed deposit, and it makes sense to shop. And it makes sense to shop carefully. How can you do that? Well, if you pick up the Wall Street Journal and you look in the back of the Wall Street Journal, there will be some guidelines for what general CDs sell for. Or if you want to do more research, go to bloomberg.com or reuters.com, and they will list even more CDs for you to check. Now, last, but not least, penalties. If you've agreed to give your money for...to somebody or to a bank for a fixed time period and you need it before it ends, then that institution may be entitled to charge you significant penalties, so you have to be very careful. Read the prospectus diligently. If you need help, contact your stockbroker or somebody very knowledgeable about CDs at the bank. Don't necessarily listen to the first person you talk to. Talk to three or four and learn a little bit. Hope that helps. I'm Roger Groh of Groh Asset, and thank you very much for spending time with me.

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