Is a fixed deposit a debt or an asset? Here's what bank clients should be aware of when FD interest rates rise.

Do fixed deposits count as assets or liabilities? The argument over whether to invest in fixed deposits is once again in the spotlight as a result of the recent increase in interest rates. According to one theory, FD accounts don't provide greater returns than market-linked products like mutual funds, so you should steer clear of making investments in them. Another point of view, however, encourages investing in FDs since they are less risky than mutual funds and equities.

According to experts, fixed deposits can also motivate a person to save money because they take a specific length of time to earn a respectable interest rate.

According to Mahesh Shukla, CEO & Founder, PayMe, "Fixed deposits are unquestionably a benefit for the clients, primarily because they are one of the most safe forms of investing, with guaranteed returns, variable interest rate pay-outs, and simple withdrawal alternatives."

The returns on fixed deposit investments are, however, quite poor, and the consumer might prefer to look into alternative investing options, he continued.

Should you make FD investments?

Any investment you make should be based on your risk tolerance and needs. If you are unclear, you ought to seek the advice of a financial expert. These guidelines also apply to fixed deposits. If you want to earn some income and have the assurance that the value of your cash won't decrease, FDs can be a smart choice. On bank fixed deposits, there is also a Rs 5 lakh deposit insurance guarantee.

Other choices

Other than fixed deposits, there are a number of other viable investing possibilities. However, the majority of experts advise investing in government bonds, which are even more secure but have a little higher rate of return, as the best method to save money.

The same is true with mutual fund investments, which are secure and rewarding over the long term. According to Shukla, liquid funds, equity funds, fixed maturity plans, corporate fixed deposits, etc. are other investment possibilities that clients should investigate for a long-term gain.