Fixed Deposits (FDs) have long been a go-to investment option for millions of Indians. Known for their safety, predictable returns, and simplicity, FDs are often the first financial product people trust with their hard-earned money. But in 2025, with rising Inflation, evolving investment options, and greater financial awareness, the question arises - Are Fixed Deposits still the safest way to grow your money? Or are they slowly losing relevance in a changing Economy? Let’s dive deep.
A Fixed Deposit is a Financial Instrument provided by banks and NBFCs that offers investors a higher rate of interest than a regular Savings Account, until the given maturity date. You deposit a lump sum amount for a fixed tenure, and the Bank pays interest either periodically or on maturity.
Talk to our investment specialist
While FDs are undoubtedly safe, they are not always the best way to grow your money. Here’s why:
Let’s say:
Over time, inflation eats into the purchasing power of your money. What ₹1 lakh can buy today, it might not be able to buy 5 years later—even if you've “grown” it in an FD.
📖 Reference: Ministry of Statistics – Inflation Data
You can withdraw an FD before maturity, but you’ll usually lose 0.5%–1% on interest. So it’s not truly flexible.
Despite these drawbacks, FDs aren’t useless. In fact, they can be an important part of a balanced Portfolio. Use FDs for:
If your goal is long-term wealth creation, here are some alternatives:
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2024 (%) Sub Cat. DSP World Gold Fund Growth ₹37.9789
↓ -0.35 ₹1,212 21.7 60.8 83.7 43.7 12.5 15.9 Global SBI PSU Fund Growth ₹30.8565
↑ 0.02 ₹5,278 -3.3 14.4 -8.8 29.3 29.6 23.5 Sectoral Franklin India Opportunities Fund Growth ₹255.574
↑ 0.22 ₹7,376 3.9 19.8 -0.1 28.6 28.9 37.3 Sectoral Invesco India PSU Equity Fund Growth ₹60.96
↑ 0.11 ₹1,391 -4.9 19.9 -10.7 28.4 27.7 25.6 Sectoral Motilal Oswal Midcap 30 Fund Growth ₹104.084
↓ -0.42 ₹33,609 4.6 17.6 1.2 28.3 33.6 57.1 Mid Cap ICICI Prudential Infrastructure Fund Growth ₹191.91
↓ -0.26 ₹7,941 -0.9 16.6 -3.1 28 34.7 27.4 Sectoral HDFC Infrastructure Fund Growth ₹47.047
↓ -0.02 ₹2,540 -0.6 18.6 -4.9 27.4 32.5 23 Sectoral Nippon India Power and Infra Fund Growth ₹339.759
↑ 0.01 ₹7,377 -1.1 17.7 -8.1 27.3 30.2 26.9 Sectoral Franklin Build India Fund Growth ₹139.718
↓ -0.03 ₹2,950 0.6 17.6 -4.2 27 32 27.8 Sectoral Invesco India Mid Cap Fund Growth ₹180.34
↑ 0.78 ₹7,802 4.9 25.8 8.6 27 28 43.1 Mid Cap Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 4 Sep 25 Research Highlights & Commentary of 10 Funds showcased
Commentary DSP World Gold Fund SBI PSU Fund Franklin India Opportunities Fund Invesco India PSU Equity Fund Motilal Oswal Midcap 30 Fund ICICI Prudential Infrastructure Fund HDFC Infrastructure Fund Nippon India Power and Infra Fund Franklin Build India Fund Invesco India Mid Cap Fund Point 1 Bottom quartile AUM (₹1,212 Cr). Lower mid AUM (₹5,278 Cr). Upper mid AUM (₹7,376 Cr). Bottom quartile AUM (₹1,391 Cr). Highest AUM (₹33,609 Cr). Top quartile AUM (₹7,941 Cr). Bottom quartile AUM (₹2,540 Cr). Upper mid AUM (₹7,377 Cr). Lower mid AUM (₹2,950 Cr). Upper mid AUM (₹7,802 Cr). Point 2 Established history (17+ yrs). Established history (15+ yrs). Oldest track record among peers (25 yrs). Established history (15+ yrs). Established history (11+ yrs). Established history (20+ yrs). Established history (17+ yrs). Established history (21+ yrs). Established history (16+ yrs). Established history (18+ yrs). Point 3 Rating: 3★ (upper mid). Rating: 2★ (bottom quartile). Rating: 3★ (upper mid). Rating: 3★ (upper mid). Rating: 3★ (lower mid). Rating: 3★ (lower mid). Rating: 3★ (bottom quartile). Rating: 4★ (top quartile). Top rated. Rating: 2★ (bottom quartile). Point 4 Risk profile: High. Risk profile: High. Risk profile: Moderately High. Risk profile: High. Risk profile: Moderately High. Risk profile: High. Risk profile: High. Risk profile: High. Risk profile: High. Risk profile: Moderately High. Point 5 5Y return: 12.49% (bottom quartile). 5Y return: 29.61% (lower mid). 5Y return: 28.88% (lower mid). 5Y return: 27.66% (bottom quartile). 5Y return: 33.60% (top quartile). 5Y return: 34.67% (top quartile). 5Y return: 32.53% (upper mid). 5Y return: 30.17% (upper mid). 5Y return: 32.03% (upper mid). 5Y return: 27.98% (bottom quartile). Point 6 3Y return: 43.73% (top quartile). 3Y return: 29.28% (top quartile). 3Y return: 28.63% (upper mid). 3Y return: 28.44% (upper mid). 3Y return: 28.31% (upper mid). 3Y return: 28.03% (lower mid). 3Y return: 27.37% (lower mid). 3Y return: 27.28% (bottom quartile). 3Y return: 27.01% (bottom quartile). 3Y return: 26.98% (bottom quartile). Point 7 1Y return: 83.71% (top quartile). 1Y return: -8.76% (bottom quartile). 1Y return: -0.15% (upper mid). 1Y return: -10.72% (bottom quartile). 1Y return: 1.20% (upper mid). 1Y return: -3.06% (upper mid). 1Y return: -4.87% (lower mid). 1Y return: -8.13% (bottom quartile). 1Y return: -4.22% (lower mid). 1Y return: 8.63% (top quartile). Point 8 Alpha: 2.80 (upper mid). Alpha: 0.19 (upper mid). Alpha: 1.79 (upper mid). Alpha: 5.70 (top quartile). Alpha: 3.70 (top quartile). Alpha: 0.00 (lower mid). Alpha: 0.00 (lower mid). Alpha: -4.86 (bottom quartile). Alpha: 0.00 (bottom quartile). Alpha: 0.00 (bottom quartile). Point 9 Sharpe: 1.56 (top quartile). Sharpe: -0.78 (bottom quartile). Sharpe: -0.30 (upper mid). Sharpe: -0.57 (bottom quartile). Sharpe: -0.11 (upper mid). Sharpe: -0.42 (upper mid). Sharpe: -0.56 (lower mid). Sharpe: -0.65 (bottom quartile). Sharpe: -0.51 (lower mid). Sharpe: 0.32 (top quartile). Point 10 Information ratio: -0.56 (bottom quartile). Information ratio: -0.27 (bottom quartile). Information ratio: 1.83 (top quartile). Information ratio: -0.30 (bottom quartile). Information ratio: 0.44 (upper mid). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (upper mid). Information ratio: 1.02 (top quartile). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (lower mid). DSP World Gold Fund
SBI PSU Fund
Franklin India Opportunities Fund
Invesco India PSU Equity Fund
Motilal Oswal Midcap 30 Fund
ICICI Prudential Infrastructure Fund
HDFC Infrastructure Fund
Nippon India Power and Infra Fund
Franklin Build India Fund
Invesco India Mid Cap Fund
CAGR
returns.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2024 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Axis Credit Risk Fund Growth ₹21.7127
↑ 0.01 ₹367 1.5 4.8 8.6 7.6 8 7.81% 1Y 11M 26D 2Y 3M 29D PGIM India Credit Risk Fund Growth ₹15.5876
↑ 0.00 ₹39 0.6 4.4 8.4 3 5.01% 6M 14D 7M 2D UTI Banking & PSU Debt Fund Growth ₹22.1993
↑ 0.00 ₹810 1.1 4.6 8.2 7.1 7.6 6.47% 1Y 9M 11D 2Y 11D HDFC Corporate Bond Fund Growth ₹32.8376
↑ 0.03 ₹35,968 0.3 4.3 7.9 7.6 8.6 6.88% 4Y 2M 12D 6Y 9M 11D Aditya Birla Sun Life Savings Fund Growth ₹555.25
↑ 0.08 ₹20,795 1.7 4.1 7.9 7.4 7.9 6.6% 5M 26D 7M 2D Aditya Birla Sun Life Corporate Bond Fund Growth ₹113.886
↑ 0.12 ₹28,598 0.3 4.2 7.9 7.6 8.5 6.9% 4Y 6M 11D 6Y 10M 17D Aditya Birla Sun Life Money Manager Fund Growth ₹374.97
↑ 0.06 ₹29,515 1.6 4.1 7.8 7.5 7.8 6.17% 5M 19D 5M 19D HDFC Banking and PSU Debt Fund Growth ₹23.2149
↑ 0.02 ₹5,935 0.3 4.4 7.8 7.2 7.9 6.78% 3Y 6M 7D 5Y 1M 17D ICICI Prudential Long Term Plan Growth ₹37.2323
↑ 0.07 ₹15,051 0.2 4.1 7.8 7.7 8.2 7.32% 3Y 8M 5D 9Y 7M 6D Indiabulls Liquid Fund Growth ₹2,551.51
↑ 0.41 ₹393 1.5 3.3 7 6.9 7.4 5.77% 1M 10D 1M 11D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 5 Sep 25 Research Highlights & Commentary of 10 Funds showcased
Commentary Axis Credit Risk Fund PGIM India Credit Risk Fund UTI Banking & PSU Debt Fund HDFC Corporate Bond Fund Aditya Birla Sun Life Savings Fund Aditya Birla Sun Life Corporate Bond Fund Aditya Birla Sun Life Money Manager Fund HDFC Banking and PSU Debt Fund ICICI Prudential Long Term Plan Indiabulls Liquid Fund Point 1 Bottom quartile AUM (₹367 Cr). Bottom quartile AUM (₹39 Cr). Lower mid AUM (₹810 Cr). Highest AUM (₹35,968 Cr). Upper mid AUM (₹20,795 Cr). Upper mid AUM (₹28,598 Cr). Top quartile AUM (₹29,515 Cr). Lower mid AUM (₹5,935 Cr). Upper mid AUM (₹15,051 Cr). Bottom quartile AUM (₹393 Cr). Point 2 Established history (11+ yrs). Established history (10+ yrs). Established history (11+ yrs). Established history (15+ yrs). Established history (22+ yrs). Oldest track record among peers (28 yrs). Established history (19+ yrs). Established history (11+ yrs). Established history (15+ yrs). Established history (13+ yrs). Point 3 Top rated. Rating: 5★ (top quartile). Rating: 5★ (upper mid). Rating: 5★ (upper mid). Rating: 5★ (upper mid). Rating: 5★ (lower mid). Rating: 5★ (lower mid). Rating: 5★ (bottom quartile). Rating: 5★ (bottom quartile). Rating: 5★ (bottom quartile). Point 4 Risk profile: Moderate. Risk profile: Moderate. Risk profile: Moderate. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Moderately Low. Risk profile: Low. Risk profile: Moderately Low. Risk profile: Moderate. Risk profile: Low. Point 5 1Y return: 8.59% (top quartile). 1Y return: 8.43% (top quartile). 1Y return: 8.18% (upper mid). 1Y return: 7.95% (upper mid). 1Y return: 7.93% (upper mid). 1Y return: 7.91% (lower mid). 1Y return: 7.85% (lower mid). 1Y return: 7.77% (bottom quartile). 1Y return: 7.76% (bottom quartile). 1Y return: 6.96% (bottom quartile). Point 6 1M return: 0.41% (upper mid). 1M return: 0.27% (upper mid). 1M return: 0.17% (lower mid). 1M return: -0.34% (bottom quartile). 1M return: 0.44% (top quartile). 1M return: -0.37% (bottom quartile). 1M return: 0.44% (upper mid). 1M return: -0.27% (lower mid). 1M return: -0.43% (bottom quartile). 1M return: 0.47% (top quartile). Point 7 Sharpe: 2.44 (upper mid). Sharpe: 1.73 (lower mid). Sharpe: 1.86 (upper mid). Sharpe: 1.46 (bottom quartile). Sharpe: 3.76 (top quartile). Sharpe: 1.54 (lower mid). Sharpe: 3.35 (top quartile). Sharpe: 1.31 (bottom quartile). Sharpe: 1.53 (bottom quartile). Sharpe: 3.05 (upper mid). Point 8 Information ratio: 0.00 (top quartile). Information ratio: 0.00 (top quartile). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (upper mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (lower mid). Information ratio: 0.00 (bottom quartile). Information ratio: 0.00 (bottom quartile). Information ratio: -1.37 (bottom quartile). Point 9 Yield to maturity (debt): 7.81% (top quartile). Yield to maturity (debt): 5.01% (bottom quartile). Yield to maturity (debt): 6.47% (lower mid). Yield to maturity (debt): 6.88% (upper mid). Yield to maturity (debt): 6.60% (lower mid). Yield to maturity (debt): 6.90% (upper mid). Yield to maturity (debt): 6.17% (bottom quartile). Yield to maturity (debt): 6.78% (upper mid). Yield to maturity (debt): 7.32% (top quartile). Yield to maturity (debt): 5.77% (bottom quartile). Point 10 Modified duration: 1.99 yrs (lower mid). Modified duration: 0.54 yrs (upper mid). Modified duration: 1.78 yrs (upper mid). Modified duration: 4.20 yrs (bottom quartile). Modified duration: 0.49 yrs (upper mid). Modified duration: 4.53 yrs (bottom quartile). Modified duration: 0.47 yrs (top quartile). Modified duration: 3.52 yrs (lower mid). Modified duration: 3.68 yrs (bottom quartile). Modified duration: 0.11 yrs (top quartile). Axis Credit Risk Fund
PGIM India Credit Risk Fund
UTI Banking & PSU Debt Fund
HDFC Corporate Bond Fund
Aditya Birla Sun Life Savings Fund
Aditya Birla Sun Life Corporate Bond Fund
Aditya Birla Sun Life Money Manager Fund
HDFC Banking and PSU Debt Fund
ICICI Prudential Long Term Plan
Indiabulls Liquid Fund
Safety? Yes. Growth? Not necessarily.
In 2025, FDs still have a place in your portfolio—but only if used strategically. For short-term safety and capital preservation, FDs are great. But if you're looking to build wealth, beat inflation, and optimise Taxes, it’s time to explore better options.
Smart Investing = balancing safety, growth, and liquidity.
A: Not usually. Most FD rates barely match inflation after tax.
A: Yes. It’s taxed as per your income slab under the old tax regime.
A: Yes, but they have the potential to give higher inflation-adjusted returns over the long term.
By Rohini Hiremath
Rohini Hiremath is the Content Head at Fincash.com, where she has authored and overseen hundreds of articles in the Personal Finance, investing, and fintech space. Her mission is to simplify money matters and make Financial Literacy accessible to everyday Indians. With a background in startups, SEO and fintech writing, Rohini brings a unique blend of editorial expertise, digital growth strategies and audience empathy to her content.
You can connect with her here.