Let us tell you that it is very important for you to know important things related to FD and mutual funds. It is very important for you to know where you get benefit from investing your money. If you too are facing such a situation of confusion, then clear your confusion from here….
Fixed Deposit i.e. FD is a means of investment in which the investor knows in advance how much interest he will get on his money and how much the amount will amount to in how many years. Nowadays, people are also liking investing in Mutual Funds through SIP. Although because it is market linked, you do not get guaranteed interest in it, but for some time now it has shown better results and investors have collected huge amount of money through mutual funds.
In such a situation, investors who prefer schemes with guaranteed returns often remain confused about which of the two options they should choose for investment. If you are also facing such a situation of confusion, then know here the important things related to FD and mutual funds, so that you can understand where investing will be a profitable deal for you.
Who is better in terms of interest?
The interest rate with which you fix your amount in FD, on maturity you get the benefit according to that interest rate. Today, most of the banks are offering maximum interest of 8% on FD. Whereas mutual funds are linked to the market. The effect of market fluctuations is visible on this. But if you invest in it through SIP, then you get an average interest of up to 12 percent, which is much better than FD. This interest can also be higher.
Who in terms of flexibility?
If seen in terms of flexibility, mutual funds are considered better. Whenever you need funds, you can withdraw the money. If you are not able to pay installments continuously, you can pause it for some time. Whereas this does not happen in FD. Once you have fixed the money for the period, you cannot withdraw the money before that. If taken out then you have to pay a penalty.
Who is tax friendly?
Even in terms of tax, mutual funds can be better than FD. In the ELSS scheme of mutual funds, you can get tax exemption only for the lock-in period of three years, but to avail the tax benefit in FD, you will have to invest for at least 5 years. Apart from this, one advantage of mutual fund is that you can start it even with small amount. SIP can be started with just Rs 500.