Fixed deposits

A fixed deposit  is an investment option where you invest your money with a bank for a fixed period of time and earn a guaranteed specified interest. You can neither withdraw nor deposit on that account until the time period elapses.

Fixed deposits can be in local or foreign currency. The interest rates can be negotiated with the banks. A minimum amount is usually prescribed and can range any where from one month to 12 months for a typical fixed deposit. You don’t necessarily need to have an account with a specific bank to fix some money with them.

Fixed deposits are useful when you want to use the money at a certain time in the future. The interest rates are fixed and you can’t withdraw the money.

My first experience with fixed deposits was in 2012 with Crane Bank. At that time we were saving for our wedding and we decided to put the funds in a fixed deposit with Crane Bank. I recall Crane Bank gave us a rate of 20% which was quite high at the time.  We managed to earn a few extra shillings by doing this.

Fixed deposits generally pay better interest than traditional savings accounts and are definitely an option to consider in your asset portfolio. 

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