Investing in fixed deposit for safety 'biggest money myth', says CA

'Inflation eating returns', says Nitin Kaushik about investment choice of many Indians.

Indians consider fixed deposits (FDs) to be safe and stable but Nitin Kaushik, a chartered accountant, calls them “the biggest money myth in India”. An overemphasis on safety might be costly in the long run, he said on X.

 

The illusion of safety

Kaushik argued that FDs appear secure because they promise fixed returns and no visible loss of capital. But their real returns shrink significantly when inflation and living costs are factored in.

 

As example, he cited that Rs 10 lakh invested in an FD in 2010 at 7 per cent interest would have doubled to around Rs 20 lakh today. However, over the same period, essential expenses such as petrol, education, and housing have risen sharply, by two to five times in some cases. In effect, the growth in FD returns does not match lifestyle inflation, leading to a decline in purchasing power.

How other assets compare

Kaushik contrasted fixed deposits with other investment avenues over the same period:

 

• Gold could have grown to about Rs 40 lakh 
• Nifty 50 index: over Rs 50 lakh 
• Real estate: between Rs 30-50 lakh, depending on the city

 

These figures underline a crucial point, the real risk is not losing capital, but losing the value of money over time.

Rethinking investment safety

According to Kaushik, true financial safety lies in beating inflation and preserving purchasing power, not merely avoiding short-term losses. He advises:

 

• Use fixed deposits primarily for short-term needs and liquidity. 
• Consider equities, mutual funds, and real assets for long-term wealth creation. 
• Embrace diversification to spread risk effectively.

“FDs never show red, so you feel secure. But behind the scenes, inflation eats your returns,” Kaushik said. His conclusion is stark: being overly safe can be the riskiest choice of all.