DelhiDesk Interest rates are at a peak in several economies, including the US and India, due to inflationary pressures and increased government spending. This presents an opportunity for investors to consider fixed deposits (FDs) and lock in higher rates. Locking in rates provides certainty regarding interest income and offers a predictable cash flow for financial planning purposes. However, the decision to lock in rates during different interest rate cycles can have varying outcomes. Investors may benefit from higher interest rates if they do not lock in initial rates for the full term of the FD. The article provides an example to illustrate this point.
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👉 Interest rates are currently peaking in several economies, including the US and India.
👉 This presents an opportune time for investors to consider fixed deposits (FDs) and lock in at higher rates.
👉 Locking in interest rates when investing in FDs provides certainty regarding the interest income that will be earned over the duration of the investment.
👉 During different interest rate cycles, the decision to lock in rates can have varying outcomes.
👉 To better understand the risks associated with locking in interest rates, let’s consider an example.
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