Fixed Deposit - To double our money ?

From my childhood days i used to hear that money can be doubled if we put it in Fixed deposit.

Is this really true ?, Yes its True.

But my concern is
1) Does FDs give a negative return
2) Should any one do FDs.
3) What are the factors which decide whether FD is suitable to me.

Answers:
1) Does FDs give a negative return:
Yes, On the basis of price index, Inflation is hovering around 9%. So for a depositor who is parking money in a bank FD with an annual rate of interest 8 %.

His actual return = Bank Interest Rate - Inflation = 7% - 8% = -1%
ie. a negative return !!.
If we consider the effect of Tax the return will be more negative.

2) Then anyone should do FDs ?
Yes, FDs are suitable for those who have short term goals [ < 3 years]. For short term goals it is not wise to take risk. For such cases FDs/Savings accound with Auto Sweep facility are the best means of investments.

3) What are the factors which decide whether FD is suitable to me.

The main factor which decide whether FD or Equities are the duration to reach our goals. For short term [ <3 years] always go for FDs.

If we have long Term goals then Equities are the best means of investment. Equities used to give an annualized return of 18-20% since the inception of stock market. Hence for the capital gain over a long period [ > 3 years ] equities are the best means of investment .

That means if we want to attain a positive return over a long period from our investment we should NOT go behind FDs because Inflation and Tax will eat out our investments in the long run.