Stop running reinvestment risk. Ladder your FDs.
Putting one lump-sum into a single 5-year FD locks you into today’s rate for half a decade. A 5-rung ladder spreads maturity so you re-price 1/5 of your corpus every year as rates change. Below: ladder builder + the DICGC ₹5L insurance gap nobody warns you about.
Ladder builder
Split your corpus across 1Y/2Y/3Y/4Y/5Y FDs at the best available rate.
₹10,00,000
| Rung | Bank | Rate | Principal | Maturity | Year |
|---|---|---|---|---|---|
| 1Y | Top bank (current rate) | 7.50% | ₹2,00,000 | ₹2,15,000 | 2027 |
| 2Y | Top bank (current rate) | 7.50% | ₹2,00,000 | ₹2,31,125 | 2028 |
| 3Y | Top bank (current rate) | 7.50% | ₹2,00,000 | ₹2,48,459 | 2029 |
| 4Y | Top bank (current rate) | 7.50% | ₹2,00,000 | ₹2,67,094 | 2030 |
| 5Y | Top bank (current rate) | 7.50% | ₹2,00,000 | ₹2,87,126 | 2031 |
| Total | ₹10,00,000 | ₹12,48,804 | +₹2,48,804 | ||
From year 5 onwards, one rung matures every 12 months. If you re-ladder maturities back into fresh 5-year FDs, you have ₹23,927 of cash flow available each month (averaged) — and your money keeps re-pricing as rates change. Single biggest reason ladders beat lump-sum FDs over 10+ years.
DICGC ₹5 lakh insurance gap
Per-bank deposit insurance cap is ₹5,00,000. Spread across more banks to bring uninsured exposure to zero.
You need 3 more bank account(s) to fully cover the uninsured ₹11,00,000. Each additional bank account gives you another ₹5 lakh of DICGC cover. SFBs (Small Finance Banks) are also DICGC-covered — they offer higher rates and add insurance capacity.
How an FD ladder protects you
The problem with a single lump-sum FD
Say you put ₹10 lakh into a 5-year FD today at 7.5%. Five years from now, if rates have climbed to 9%, you’re still earning 7.5%. If rates have dropped to 5%, you only find out when the FD matures and you’re forced to reinvest the entire ₹10 lakh at the new (lower) rate. Both outcomes are bad. That’s reinvestment risk.
How a 5-rung ladder fixes it
Split the ₹10 lakh into five ₹2 lakh FDs maturing in 1, 2, 3, 4, and 5 years respectively. Every year, the maturing rung re-prices at whatever rate is current. You always have cash maturing in 12 months (liquidity) AND you average across rate cycles. Bankrate has been recommending this in the US since the 1990s; nobody in India ships a builder for it.
The DICGC ₹5 lakh insurance cap
Deposit Insurance and Credit Guarantee Corporation (DICGC) insures bank deposits up to ₹5 lakh per depositor per bank. If you have ₹15 lakh in SBI and SBI fails, you get back ₹5 lakh — the other ₹10 lakh is unsecured. The fix: spread across multiple banks. The visualiser above shows your exact uninsured exposure.
What this tool does NOT cover (yet)
We use the top general rate per bank from our database for the ladder math. Actual best rates vary by exact tenure (444-day SBI Amrit Kalash, 555-day Indian Bank, etc.). For senior-citizen FDs, add 0.25–0.75% to general rates per bank schedule. Tax (TDS u/s 194A, 10% above ₹40K interest for non-seniors / ₹50K for seniors) is shown but auto-applies at your slab rate during ITR filing.
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Regulated by Reserve Bank of India.
Bank fixed deposits are regulated by the Reserve Bank of India and protected by DICGC insurance up to ₹5 lakh per depositor per bank. Corporate / NBFC fixed deposits do NOT carry DICGC cover and carry issuer credit risk — read the credit-rating disclosure carefully. Senior-citizen rates and tax-saver-FD eligibility apply per scheme T&C.
Risk note: Premature withdrawal of fixed deposits typically incurs a 0.5–1% penalty on the applicable interest rate. Plan tenure to match your liquidity needs.
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