As an investor, either new or experienced, a high-yielding fixed deposit account is always a great way of investing. Not only is it safe, but it also offers fixed rates on the money invested. A fixed deposit account by definition is an investment account that requires a fixed amount of money to be invested for a fixed period of time at a fixed interest rate.

In order to properly invest in a fixed deposit account, any investor should research in order to find the best rates offered in the country and also how safe and reliable the institutions are. Fixed deposit accounts are offered by various banks, non-banking financial institutions, and companies.

What to look out for when opening a high-yielding fixed deposit account.

1. Interest rates. The bank or financial institution in which you choose to invest with a fixed deposit account should have competitive interest rates. Most banks and companies have an interest rate that is above 6% per annum.

2. Banks/companies' credibility. Make sure to check the credibility of the bank or company before investing in an FD account. Look up its ratings on your country's financial organizations.

3. Penalty rates. One of the most important details is the penalty rates issued upon you if you decide to withdraw your money before its maturity. This will save you losses in case you have to withdraw your money earlier than agreed on.

4. Loans on the fixed deposit account. Check if the institution accepts using the FD account as collateral against a loan. This can come in handy if you need cash at hand and you therefore won't need to withdraw from the FD account.

5. Premature withdrawal. Choose an institution that allows for a premature withdrawal in case of emergencies. A small penalty levy could be issued in the said case.

6. Bank or non-banking institution. This is an important choice in investing. Make your financial goal and see exactly what fits. Whether it would be short-term or long-term investing.

7. Cumulative deposits or non-cumulative deposits. Whichever your choice you have to understand when the interest rates are paid to you. In cumulative, the interest is paid to you once the FD matures while with the non-cumulative the interest is paid as agreed upon, either annually, half-yearly, quarterly, or monthly.

How to open a high-yielding fixed deposit account.

If you want to open a high-yielding fixed deposit account, it's recommended and sometimes mandatory that you have an account with the bank you deal with. If you are opening with a non-banking financial company then the requirements will be slightly different. If you already have an account with the bank, it could even be possible to open a fixed account online as all your details will be with the bank.

In the case that you don't have an account, you will have to go physically to the bank or company and present your Identification card, personal information, KRA pin, and the minimum amount of cash needed to open the account. Most banks require a minimum of Ksh 1 million in order to open a high-yielding fixed deposit account. This process could take from 15 to 30 minutes to be done with the whole process.

Who should invest in a high-yielding fixed deposit account?

⦁ Retired individuals who want an investment that is stable, low risk, and has good returns.

⦁ Those who want to meet their financial goals as the risk is low and returns are fixed.

⦁ People who want low-risk investments and don't want to save in a savings account. A fixed deposit has higher returns than a savings account.

⦁ When you invest in a fixed deposit, the duration of investment or tenure and interest amount is predetermined. The institution also assures you to return your money at maturity. That makes FDs a relatively safe investment avenue. 

⦁ People who want to balance risk in their investment portfolio. Investing a portion of your funds in fixed deposits will balance out the risk of different forms of investing.