Questions About Fixed Deposits & Government Bonds?

Yes, interest income from fixed deposits is taxable at your marginal tax rate. However, if you’re under 55 and your total income is below the threshold, you might not owe tax. Government bond interest is also taxable, but some bonds (like development bonds) offer tax-free growth. It’s worth checking with your bank or an accountant about your specific situation.

You can, but you’ll usually lose some or all of the interest earned. Most banks penalize early withdrawal—sometimes you get zero interest, sometimes a reduced rate. Government bonds are trickier because you might have to sell them on the secondary market, which could mean accepting a lower price if interest rates have risen since you bought them.

Laddering means dividing your money into CDs with different maturity dates—say 1 year, 2 years, and 3 years. When each matures, you reinvest it in a new 3-year deposit. This way you get better average returns than locking everything into one long-term deposit, plus you have regular access to cash without penalties. It takes discipline but works well for savers who don’t need the money immediately.