Are Fixed Deposits better than Mutual Funds? Reality exposed!!!

 Are really FDs better than MFs? Let's checkout the facts for us to come to a conclusion. This blog contains all the details you need to know. 


The full form of FDs are Fixed Deposits. These are money baskets created by investors with some of the banks or non-banking financial companies. You will have to stay invested for a fixed duration until your principal amount matures. Therefore, it is called fixed deposits. 

Mutual fund is a money basket, invested by various investors and it is managed by professional analysts. These are now more trending because of their higher returns. Click here to know all about mutual funds. Mutual fund investment can be done in form of SIP or lumpsum.

Interest Rate of Fixed Deposits and Mutual Funds-

Now, let's come to the most important point that is interest rate. FDs offer around 3.00 to 6.50% interest rate for general citizens and almost about 3.00 to 7.50% interest rate for senior citizens whereas MFs are providing returns of about 12.5% consistently from about past 5-10 years. So, as you see MFs are anytime better as they are providing almost double the returns and these are subject to share market risks (MFs like index funds, ELSS funds and debt funds are quite safer and are providing consistent returns).

Fixed Deposits and Mutual Funds VS Inflation-

Have you ever considered inflation rate in your calculation? If not, let me tell you. Inflation rate of India currently is around 6% which means that in most cases FDs are hardly beating inflation rates. 

So, what's the use of being invested for such a long time in FDs and getting almost 0% returns. Thus, MFs are better investment opportunities which not only beats inflation rates but also grows your money.

Lock-in period of Fixed Deposits and Mutual Funds-

As the name suggests, FDs are for fixed duration and if we withdraw before maturity or break them we will be charged penalty whereas many MFs come with 0 lock-in period. I have mentioned one such name of mutual fund which has 0 lock-in period in this blog. Thus, MFs are better investing opportunities. 

Risk involved in Fixed Deposits and Mutual Funds-

You might have always heard mutual funds are riskier but it's not true. Some mutual funds like debt funds or index funds have moderate risk. Fixed deposits have very less risk. But, it does makes sense to take some risk to gain more than double the returns of FD in many MFs.

Generally, senior citizens must choose FDs over MFs keeping safety in mind whereas working class and youngsters must choose MFs as they provide superior returns in long term. 

Whether you are investing in FD or MF, always keep in mind to stay invested for long time to milk it's benefits and to take advantage of COMPUNDING effect.

Mutual funds and FDs both can be started with minimum investment of 100 onwards. So, do start investing in either of them as per yourself. I have shared the link for the FD and MF calculator below. So, now let me show you some example of predicted returns in case of investment of 10 lakh rupees.

For FD of 10 lakh rupees:


For MF investment of 10 lakh rupees:

I hope above calculation has shown you which is better. So, my suggestion would be choosing MFs above FDs and to be invested for a long time.

Click here to check best mutual fund calculator and to check best fixed deposit yield calculator.

Link to join my Telegram group to so that you don't miss any finance related blogs in future.

https://t.me/multiplyingmoneymadeeasy



ACTION STEPS:

START investing through mutual funds and fixed deposits right now.


I wish you a very bright and financially free future. Kindly share this useful blog with your family and friends. Keep coming back for more such financial blogs.

Information sahi milegii yhi








Location: Mumbai, Maharashtra, India

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