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Confused Between Investing in Fixed Deposit or Mutual Funds?

A low-risk investor always prefers to invest money in a financial institution.

Confused Between Investing in Fixed Deposit or Mutual Funds?

A low-risk investor always prefers to invest money in a financial institution. However, with other options opening up, with debt funds now in the scenario. They face a major challenge as to where should they invest? Should they invest in security offering fixed deposit or should they invest in risky mutual funds? Mutual funds offer a higher income as compared to the fixed deposits, but as mentioned before, the return on investment is not guaranteed. 

One thing to note here is that the difference between both these investment avenues is not much. Both fixed deposits and debt funds are similar. However, they contradict each other. Key areas where they differ are safety, liquidity and returns. When we consider the various factors, both of these investment modes are equally beneficial. Mutual funds have an edge in tax-adjusted returns and liquidity whereas fixed deposit has an edge when it comes to assured returns.

When you have a decent amount of money that you have saved, you are now looking forward to investing it. In such a scenario, several things will run in your mind. These are nothing but the condition that you are looking forward to being met. These include:
 
Investment in a safe avenue having low-risk

Being able to realise returns in 5 years

Achieving at least 8 to 9% returns
If these are the conditions for which you want an answer, then you can place your bet in either Fixed Deposit or Debt Mutual Funds. Both of these investments meet the criteria which you are looking for. However, they are not similar and have their share of difference. Hence, you can decide which investment option is best for you.

Safety of Invested Capital:

Fixed Deposits: Having a credit rating system for your investments which classifies the investment according to how well will your investment do with respect to its credit rating. The rating and classification system takes into account several aspects such as the volatility, current market status, duration, and the avenues or securities and commodities you are investing in.

Debt Mutual Funds: The investment in debt mutual funds are measured on the basis of the investment portfolio as there is no rating. Safety levels of approximate investment are considered. The determination of the safety of investment through the involvement of diligent analysis is involved. However, these are not guaranteed, unlike fixed deposits.



Hence, if you are looking for a low-risk investment, you must choose to invest your money in FD

Rate of Return on Investment: 
 
Fixed Deposits: Fixed deposits follow a model of fixed interest rates which you are aware of before you invest. Currently, interest rates in the market are between 8 to 9%. Also, these rates do not change even at the time of financial volatility or crisis. 

Mutual Funds: Rate of interest is not fixed or pre-communicated to you. The rate of return must be predetermined by you before investing. Over here the performance of previous mutual funds must be taken into consideration. There are no guaranteed returns on investment. Fluctuations and market volatility are the factors that determine the rate of interest.

Thus, we can understand that fixed deposits are safer investment options wherein the returns are predictable.

These funds are locked until they mature. Hence, if you are looking to earn a considerable amount of benefits and interests, then fixed deposits are the best investments. 

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Confused Between Investing in Fixed Deposit or Mutual Funds?

A low-risk investor always prefers to invest money in a financial institution.

A low-risk investor always prefers to invest money in a financial institution.
A low-risk investor always prefers to invest money in a financial institution. However, with other options opening up, with debt funds now in the scenario. They face a major challenge as to where should they invest? Should they invest in security offering fixed deposit or should they invest in risky mutual funds? Mutual funds offer a higher income as compared to the fixed deposits, but as mentioned before, the return on investment is not guaranteed. 

One thing to note here is that the difference between both these investment avenues is not much. Both fixed deposits and debt funds are similar. However, they contradict each other. Key areas where they differ are safety, liquidity and returns. When we consider the various factors, both of these investment modes are equally beneficial. Mutual funds have an edge in tax-adjusted returns and liquidity whereas fixed deposit has an edge when it comes to assured returns.

When you have a decent amount of money that you have saved, you are now looking forward to investing it. In such a scenario, several things will run in your mind. These are nothing but the condition that you are looking forward to being met. These include:
 
Investment in a safe avenue having low-risk

Being able to realise returns in 5 years

Achieving at least 8 to 9% returns
If these are the conditions for which you want an answer, then you can place your bet in either Fixed Deposit or Debt Mutual Funds. Both of these investments meet the criteria which you are looking for. However, they are not similar and have their share of difference. Hence, you can decide which investment option is best for you.

Safety of Invested Capital:

Fixed Deposits: Having a credit rating system for your investments which classifies the investment according to how well will your investment do with respect to its credit rating. The rating and classification system takes into account several aspects such as the volatility, current market status, duration, and the avenues or securities and commodities you are investing in.

Debt Mutual Funds: The investment in debt mutual funds are measured on the basis of the investment portfolio as there is no rating. Safety levels of approximate investment are considered. The determination of the safety of investment through the involvement of diligent analysis is involved. However, these are not guaranteed, unlike fixed deposits.



Hence, if you are looking for a low-risk investment, you must choose to invest your money in FD

Rate of Return on Investment: 
 
Fixed Deposits: Fixed deposits follow a model of fixed interest rates which you are aware of before you invest. Currently, interest rates in the market are between 8 to 9%. Also, these rates do not change even at the time of financial volatility or crisis. 

Mutual Funds: Rate of interest is not fixed or pre-communicated to you. The rate of return must be predetermined by you before investing. Over here the performance of previous mutual funds must be taken into consideration. There are no guaranteed returns on investment. Fluctuations and market volatility are the factors that determine the rate of interest.

Thus, we can understand that fixed deposits are safer investment options wherein the returns are predictable.

These funds are locked until they mature. Hence, if you are looking to earn a considerable amount of benefits and interests, then fixed deposits are the best investments. 
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Business Standard
177 22

Confused Between Investing in Fixed Deposit or Mutual Funds?

A low-risk investor always prefers to invest money in a financial institution.

A low-risk investor always prefers to invest money in a financial institution. However, with other options opening up, with debt funds now in the scenario. They face a major challenge as to where should they invest? Should they invest in security offering fixed deposit or should they invest in risky mutual funds? Mutual funds offer a higher income as compared to the fixed deposits, but as mentioned before, the return on investment is not guaranteed. 

One thing to note here is that the difference between both these investment avenues is not much. Both fixed deposits and debt funds are similar. However, they contradict each other. Key areas where they differ are safety, liquidity and returns. When we consider the various factors, both of these investment modes are equally beneficial. Mutual funds have an edge in tax-adjusted returns and liquidity whereas fixed deposit has an edge when it comes to assured returns.

When you have a decent amount of money that you have saved, you are now looking forward to investing it. In such a scenario, several things will run in your mind. These are nothing but the condition that you are looking forward to being met. These include:
 
Investment in a safe avenue having low-risk

Being able to realise returns in 5 years

Achieving at least 8 to 9% returns
If these are the conditions for which you want an answer, then you can place your bet in either Fixed Deposit or Debt Mutual Funds. Both of these investments meet the criteria which you are looking for. However, they are not similar and have their share of difference. Hence, you can decide which investment option is best for you.

Safety of Invested Capital:

Fixed Deposits: Having a credit rating system for your investments which classifies the investment according to how well will your investment do with respect to its credit rating. The rating and classification system takes into account several aspects such as the volatility, current market status, duration, and the avenues or securities and commodities you are investing in.

Debt Mutual Funds: The investment in debt mutual funds are measured on the basis of the investment portfolio as there is no rating. Safety levels of approximate investment are considered. The determination of the safety of investment through the involvement of diligent analysis is involved. However, these are not guaranteed, unlike fixed deposits.



Hence, if you are looking for a low-risk investment, you must choose to invest your money in FD

Rate of Return on Investment: 
 
Fixed Deposits: Fixed deposits follow a model of fixed interest rates which you are aware of before you invest. Currently, interest rates in the market are between 8 to 9%. Also, these rates do not change even at the time of financial volatility or crisis. 

Mutual Funds: Rate of interest is not fixed or pre-communicated to you. The rate of return must be predetermined by you before investing. Over here the performance of previous mutual funds must be taken into consideration. There are no guaranteed returns on investment. Fluctuations and market volatility are the factors that determine the rate of interest.

Thus, we can understand that fixed deposits are safer investment options wherein the returns are predictable.

These funds are locked until they mature. Hence, if you are looking to earn a considerable amount of benefits and interests, then fixed deposits are the best investments. 

image
Business Standard
177 22