Both mutual fund and FD have been popular investment vehicles that paved the way for the growth of savings. But, the benefits of both differ based on investment needs. When safety is the main concern, the fixed deposit has the upper hand as “my money is safe in the bank” is more relieving than better investments. But at the same time, the FD returns post-tax may barely beat inflation. Let us consider various factors to decide the winner of the game.
Returns on money invested
With fixed deposits, the banks offer assurance for guaranteed returns. If you have invested high you can get the highest FD interest rates. On the flip side, the assurance of a guaranteed return is a big question mark. This doesn’t mean that the investments will always be negative.
Liquidity
Mutual funds are highly liquid compared to that of fixed deposits. If you want to redeem the FD before the maturity period you will be liable to pay a penalty.
Risk factor
In one line, the risk factor in a mutual fund is high while the same is minimal for fixed deposits.
The winner of the game has to be decided by you because both the options have its own merits and demerits and this differs based on your goal.
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