A high-yield fixed deposit (FD) is a form of fixed deposit that offers higher interest rates than usual fixed deposits.

It enables investors to receive more interest on their investments over a time period, making it an appealing alternative for those wishing to maximise returns while keeping their money safe.

What is a high-yield fixed deposit?

High-yield FDs are often associated with slightly higher risks or stricter terms, such as a longer duration or a higher minimum deposit. However, they offer better results than FDs, making them appropriate for people looking for higher incomes with less risk.

For example, a regular FD might offer an interest rate of 4 to 6 per cent, while a high-yield FD can offer an interest rate of 7 to 9 per cent, depending on factors like the bank or financial institution, the amount deposited, and the tenure of the deposit.

Benefits of high-yield fixed deposit

Here are some of the benefits of a high-yield fixed deposit.

1. Higher Returns
   
   The primary advantage of high-yield FDs is that they offer greater interest rates, allowing investors to earn more on their deposits. This makes them a great option for people seeking guaranteed profits with minimum risk.
2. Low Risk
   
   Since high-yield FDs are not impacted by market swings, they are low-risk investments, much like conventional FDs. Because the interest rate is fixed at the time of investment, investors can expect a guaranteed return.
3. Fixed Interest Income
   
   High-yield fixed deposits offer the same interest rate throughout the time they are invested. Unlike market-linked assets that are subject to value fluctuations, such as stocks or mutual funds, this ensures consistent returns.
4. Reliable
   
   People who want a reliable source of income, such as retirees or those with certain financial objectives, can feel assured knowing that high-yield FDs will produce consistent returns over time.
5. Perfect for Conservative Investors
   
   While they are not as profitable as other investment options, their consistency, predictability, and security make them excellent for conservative investors, seniors, or anybody searching for a low-risk way to increase their assets over time.