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Mutual Funds or FD (Fixed Deposit): Which is Good?

by Everydays Journal
indian notes

You are new to investing, and wondering and searching which is better to invest in Mutual Funds or FD (Fix Deposit)?

However, you will get your answer “FD is best” from your friends and relatives. But you have to understand what is the difference between mutual funds and fixed deposits.

Mutual Fund

As per my understanding, a mutual fund is a company that takes investment from people in form of money. Mutual fund companies invest this money in stocks, bonds, assets etc. In other words, a mutual fund is a portfolio of stocks and bonds.

Investors like you and me get profit when stocks or assets go up and down. You get this return from 7% to 9.46 in a year.

Types of mutual funds:

  1. Bond Funds
  2. Stocks Funds
  3. Money Market
  4. Hybrid Funds

There are two ways to invest in mutual funds: SIP and Lump Sum.

  • SIP (Systematic Investment Plan) – SIP works on a monthly investment basis.
  • Lump Sum – It is a one-time investment policy, investors invest money once and they also have the right to invest second time.

Risk Factor – Mutual funds are subject to risk but give high returns.

FD (Fixed Deposit)

It’s a resource by the banks and NBFCs that give the rights people to invest and, earn a yearly guaranteed profit on invested money in form of interest.

Two ways to invest in FDs:

  • First of all contact the bank you are using. Talk to bank employees or managers and tell them “I want to invest in FD” they will guide you.
  • Secondly, you can approach online fixed deposit providers like Bajaj Finance.

Risk Factor – There is no risk in Fixed deposit.

In Conclusion

A mutual fund is a risky subject but it gives high returns and FD is safe but has low returns.

According to the inflation data of India, I suggest mutual funds because inflation goes up 4% every year and mutual funds give a minimum of 9.46% returns.


Which is best for investing: mutual funds or FD?

Both are good for investors, it depends on you that you can take risks or want a safe investment.

How much can I invest in SIP?

Investment in sip starts with 100 rupees per month and there is no limited money to investing in it.

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