Published On: Tue, Jul 11th, 2017

Where can you invest your money: Mutual funds or fixed deposits?

Investments these days is the most preferred choices for many people. As investments give a good chunk of profit many people go for it. If you wish to replicate your funds, investing it can help you. Instead of saving your money you can any day invest it and earn good returns on it.

Investments always carry some risk with them. Many people hesitate to invest their funds as investments are considered as unsafe. The investment options that depend upon the market conditions involve higher risk. The market conditions are always volatile and hence you can never be too sure about how your investment will do in the long run. This makes investing more unsafe. But not all investment options are unsafe.

photo 401(K) 2012 via Flickr

Mutual funds, shares, gold are investments which involve higher risk whereas fixed deposits involve low risk. Both the investment options offer you with high returns on an investment. People usually go for investing their surplus funds instead of saving them. One can either invest surplus income coming from a business profit or from a salary appraisal. Now you either invest in mutual funds or can go for investing in FD. It’s common that one might get confused about which investment option he should go for.

Here is how you can choose between a mutual fund investment and fixed deposit investment:


  • Fixed Deposit investment:


When talking about investments, most people prefer fixed deposit investments. Investments in the fixed deposit are considered a much safer option as they involve less risk. The returns offered on a fixed deposit are fixed and don’t tend to fluctuate over time. As this investment is not depended upon the market condition they are considered safe.

Generally, FD interest rates offered are high compared to a savings account. Usually, these interest rates offered on fixed deposit can differ from bank to banks. Some banks may offer you with high interest rates whereas some may offer you with low interest rate on the same amount. Also, these interest rates depend upon two main factors i.e. the invested amount and the tenure you are investing it for.

Fixed deposits don’t only offer you high interest rates but also offer you with an overdraft facility and an insurance worth INR 1 lakh on the invested amount. If you want a higher rate of interest you can open a fixed deposit with NBFCs as well. They offer you an interest rate which is higher than what banks offer.


  • Mutual fund investment:


Investments in mutual funds involve high risk. But, if you want higher returns on your investments and you are fine with the risks than you can definitely opt for investments in mutual funds.

Investments in mutual funds are considered unsafe as they depend upon the market condition. And hence the returns you get here are not fixed.

In case you are stuck in a financial emergency, you can any day withdraw funds from mutual funds as it does not restrict you from doing so. You won’t be charged with any penalty if you withdraw money from your mutual funds.

The choice of investing your money completely depends on you and your preferences. If you wish to get more returns and don’t mind the risk then you should choose mutual fund investment but if you want to play it safe then you should opt for fixed deposits.

Author: Nidhi Mahajan

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