A lot of people have this common question about the mutual fund and fixed deposit. Early Investors often compare the both. But, let us make it clear that fixed deposit is fixed in return value.
Banks have pre-decided rate of interest on FDs and it is also one of the safest options of investments but with low return value. On the other side, mutual funds have that element of risk and, that depend upon the market fluctuations.
The mutual fund’s performance is highly dependent on the market volatility. If your portfolio is better enough then, there may be chances of getting some lucrative returns whereas FDs are fixed in a rate which vary from 4%-6%.
Fixed Deposit: It is an assured return on your money which is deposited in the bank. There is no risk involve as it is one of the safest ways of getting returns.
Mutual Fund: It is a folder or portfolio consists of various stocks, debts and sometimes FDs too. The returns are directly proportionate to the performance of the stock market.
Comparison (FDs versus Mutual Fund)
If we go by traditional Indian investors’ belief then, they feel FDs are safer than any other option available. There is an assurance of safety as well with the money deposited in the banks. But when we compare the same with the respective rate of returns then the high variations can be seen clearly. Let us discuss phenomenal with some factors.
By and Large:
There are some more factors to be discussed when we compare the FDs and Mutual funds. Overall we should see the below variables to be able decide the where to invest. It is clear that FDs are safer but returns are extremely low whereas letter provides high returns. As an Investor, if one is looking for safest option to put their money then FDs are better option but if one is looking for some lucrative returns then Mutual funds are best be in.
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