This is my first post and would like to keep it as simple as possible. Let us first talk about inflation. Inflation is the increase in the prices of goods / consumables / commodities / services etc., over time. Inflation rate over the years on an average has been around 8.5% p.a. It means that the prices increase at the rate of 8.5% p.a. If the price of item X is Rs. 100 today, after 1 year same item would cost you Rs. 108.5. Now, coming to Fixed deposits, they offer you interest rate of ~ 8.5%. So, Rs. 100 invested in Fixed deposit would give you Rs. 108.5 after an year. Due to inflation, the value of item X has gone up to 108.5. So with the money invested through Fixed deposit, you can barely buy the same item X after an year. It means you can barely maintain your standard of living and worse if inflation rate > Interest rate, which will deteriorate your standard of living. Your REAL RETURN OR INFLATION ADJUSTED RETURN (which is Interest rate-Inflation rate) from Fixed deposit is ‘ZERO’. So, can Fixed deposits create wealth?? You always have to invest in financial products which will give returns much higher than Inflation rate. I will share info. about such products in my subsequent posts.