Investing Rs 5 Lakh in FD: Single Deposit or Multiple FDs for Better Flexibility?
Fixed deposits (FDs) remain a favourite among conservative investors for one simple reason, they offer predictable returns without market risk. But when investing a large amount, many people wonder whether it is better to put the entire sum into one FD or split it into several smaller deposits.
If you are planning to invest ₹5 lakh for 10 years, both approaches can deliver nearly the same returns. The real difference lies in flexibility, liquidity, and safety.
How Much Can ₹5 Lakh Grow in 10 Years?
Assuming the following:
That means your money almost doubles over a decade.
What If You Split It into Five FDs?
Now imagine dividing the same ₹5 lakh into five separate FDs of ₹1 lakh each.
Maturity Value of One ₹1 Lakh FD
Total Value of Five FDs
Why Multiple FDs Can Be More Practical
Although the earnings are almost the same, splitting your money into smaller FDs offers several advantages.
Easy Access to Funds
If you suddenly need ₹50,000, breaking one ₹1 lakh FD is much better than prematurely closing a single ₹5 lakh FD.
This allows the remaining deposits to continue earning full interest.
If you are planning to invest ₹5 lakh for 10 years, both approaches can deliver nearly the same returns. The real difference lies in flexibility, liquidity, and safety.
How Much Can ₹5 Lakh Grow in 10 Years?
Assuming the following: - Investment amount: ₹5,00,000
- Interest rate: 7% per annum
- Tenure: 10 years
- Compounding: Quarterly
That means your money almost doubles over a decade.
What If You Split It into Five FDs?
Now imagine dividing the same ₹5 lakh into five separate FDs of ₹1 lakh each.Maturity Value of One ₹1 Lakh FD
- Investment amount: ₹1,00,000
- Maturity value: Approximately ₹2,00,160
Total Value of Five FDs
- Total investment: ₹5,00,000
- Combined maturity amount: Around ₹10 lakh
Why Multiple FDs Can Be More Practical
Although the earnings are almost the same, splitting your money into smaller FDs offers several advantages. Easy Access to Funds
If you suddenly need ₹50,000, breaking one ₹1 lakh FD is much better than prematurely closing a single ₹5 lakh FD. This allows the remaining deposits to continue earning full interest.
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