In our expert opinion, both mutual funds & Fixed Deposits are great investment instruments, and both the instrument provides the investor a good return on investment over a while.
In an Indian household, most people show interest and trust in FD, whereas many middle-class people avoid investing there due to market risk.
Return’s
The return in a mutual fund depends on the stock market performance.
Whereas in fixed deposits, you will guarantee a fixed return on a specific rate of return.
A mutual fund is risky as the fixed deposit is a completely safe option to invest in. The risk in mutual funds varies from the fund & sector in which you are investing and depend on the market.
Whereas FD carries nil risk, you will be guaranteed a return.
Tax Liability
Tax liability is much higher in bank FD’s in comparison to mutual funds.
In the case of Bank FD, the percentage of this tax is as per your income slab. In comparison, mutual funds have different schemes in which you can choose according to your need. If you want to save tax, you can opt Tax saving mutual funds, which are highly trustable in terms of saving taxes.
Conclusion:
Most of the population in India refrain from investing money in Mutual funds. Indians always go with the safety plan put their money in bank fixed deposits as it will be guaranteed a return without any risk.
But they don’t know that in the long term, mutual funds can provide great returns, more than 5x times extra than the fixed deposits.
And mutual funds are a very liquid investment. You can withdraw money any time, you have to pay nominal fee’s, and mutual funds are also a tax-efficient investment.
