The Impact Of Interest Rate Changes On Fixed Deposit Investment Decisions
Fixed deposits are a popular investment option that provides a steady and secure return on investment. They are crucial for investors as they determine the return on their investments. When interest rates fluctuate, it can significantly impact the investment decisions of holders of fixed deposits. One of the primary reasons investors choose fixed deposits is the guaranteed return they offer. They are typically higher than the interest rate offered by savings accounts. However, the interest rate on fixed deposits is not fixed and can change over time. When the interest rate drops, investors may be inclined to withdraw their investments and move to other investment options with higher returns. Conversely, when the interest rate increases, investors may be more likely to invest in fixed deposits for a longer duration, such as a fixed deposit for 1 year , to take advantage of the higher interest rate. Fixed deposit interest rate changes can also impact inflation. When interest rates increa...