Fixed Deposits vs Mutual Funds - Know the Difference

Where to invest?

When it comes to saving money, Fixed Deposits (FDs) are the most preferable option for the investors. The reason being, it is one of the oldest saving instruments and deemed to be the safest with a fixed rate of return.

But is it still the most appropriate investment option in the current times? Does it still provide the best returns? Or there are other investments like Mutual Funds that provide greater returns and help achieve a goal in a better way?

Read on to know which one out of Mutual Fund vs. Fixed Deposit is a better investment option.

FD or Mutual Fund

FD, also known as Fixed Deposit, is a popular saving instrument provided by banks for short-term and long-term investments. The rate of return on FDs is fixed and pre-decided by the Government of India; hence the growing inflation doesn’t impact the return on these investments. Notably, the FD returns are taxable for the investors but the FD investments are eligible for tax deductions under Section 80C of the Income Tax Act.

Mutual Funds, on the other hand, are market-based investment instruments with no fixed rate of return. However, during the long run, they have been observed to give 10-15% return, which is pretty higher than that given by FDs. There are 3 types of Mutual Funds – Debt, Equity and Balanced.

Debt Mutual Fund invests a majority of the investment amount in government bonds, corporate bonds, and securities and the rest of the amount in equity markets whereas Equity Mutual Funds invest more in the equity market and lesser in government bonds, corporate bonds, and securities. Balanced Mutual Funds invest partially in both Debt and Equity Funds.

Difference between FD and Mutual Fund

It is still a question whether to invest in a Mutual Fund or in a Fixed Deposit. The following comparison of Mutual Fund vs. Fixed Deposit is based on certain parameters that might help you make a decision.

Other Topics

Difference between IPO and FPOPreference SharesStock quotation meaning How to read stock charts Stock market crashHow to invest in stock market with little moneyWhat is pre open market 12 factors affecting gold prices What is hedging in stock market Face value of share meaningBonds vs StocksStop loss meaningCapital market and its types Stock market indexSustainable growth rate ROCE vs ROE Effect of inflation on investment ROCE formula How to develop stock investor mindset Inflation meaning Blue chip stocks Top line and bottom line growth How to trade commodities Primary market and secondary market Nifty meaningTypes of commodity market Stock valuation Difference between NSE and BSE DVR shares Difference between sensex and nifty What is intraday trading NCDEX meaning Difference between Shares and Debentures Intraday trading tips Cyclical vs Defensive stocks Defensive stocks What is secondary market What is primary market Mcx meaning Sensex meaning Difference between equity share and preference share Difference between dematerialisation and rematerialisation Types of investment options Benefits of IPO Margin Funding What is a Derivative Financial regulators in india Investors and Traders Online Trading Concepts Tax Saving Investment Options India VIX How to Invest in Stock Market What is share market Learn Stock Market Highest dividend paying stocks Types of Demat Account What is SWP what is online trading Futures and Options Trading Rules what is ipo how to buy ipo online How to Pick Stocks Financial goals for a secured life Bull Vs Bear Market short term and long term investment Difference Between Debt & Equity Market Stock Analysis


Free Demat & Trading A/c – Get up to Rs.5,500/-*