Smart Money Move: 1 Big FD or 10 Small FDs – Which Is Better for ₹10 Lakh?

Fixed deposits (FDs) remain a popular investment choice in India due to their guaranteed returns, with people often debating whether to invest in a single large FD or multiple smaller ones

A single FD of ₹10 lakh at a 7% interest rate for 10 years can yield approximately ₹1967 lakh, offering simplicity with one maturity date and less hassle for those who don't need interim access to the funds.

One significant drawback of a single FD is the lack of liquidity; if you need to withdraw part of the money, you must break the entire deposit, incurring penalties on the full amount

The DICGC insures only up to ₹5 lakh per bank, including interest, which could leave parts of a single large FD uninsured

Opting for 10 smaller FDs of ₹1 lakh each offers better liquidity, as you can break only the necessary amount without affecting the rest

Spreading smaller FDs across multiple banks can ensure full insurance coverage under DICGC rules and potentially allow reinvestment at higher rates if interest rates rise

Managing multiple FDs requires more effort in tracking maturity dates and handling paperwork, which might be cumbersome for some investors

Investors seeking simplicity might prefer a single FD, while those valuing flexibility and security may find multiple smaller FDs more advantageous