Fixed Deposit vs Mutual Funds? (Which is better)

If you ask this question “Fixed Deposit vs Mutual Funds? (Which is better)” to the bunch of people, I am sure you will get the reply fixed deposit (FD) is better:


What your opinion?

I had flout this survey among a lot of groups through “what’s up” and “facebook” the majority of people go with Mutual funds.

the fact is: consistency investment in the mutual fund and looking at the past performance of the market, it is sure you will be a millionaire.

Is it really mean for us?

Fixed Deposit or Mutual Funds

Everybody invested in the mutual fund has read or heard this phrase:

“Mutual fund investment is subject to market risks please read the document before investing”

What does it mean, if the market doesn’t perform as desired by the investor, we won’t be a millionaire.

Is it true:?

Yes it is

Also Read: Shares Investment Guide 2018 (Beginners) 

So basically we are believing in the past performance will be repeated in the future:

Although, if we talk about India its one of the growing economy in the world.

The mutual fund is one of the trusted platforms for the investor, the investor can participate in the form of SIP, one-time investment and get a good amount of money in the future.

Fixed Deposit vs Mutual fund

Disclosures on mutual funds

According to the report of the association of mutual fund of India, the mutual fund industry is worth for ₹ 23.17 lakh crore as on Feb 2018, the industry enhanced with the growth of ₹7.01 trillion as on 31st March 2013 to ₹22.20 trillion as on 28th February 2018.

Also Read: Benefits of Investing in Mutual Funds

Is a mutual fund industry really making people rich? 

We will dive deep into the facts to get the reality:

If we look into the return from mutual funds in the last 20 years and the return of the equity market in the last 20 years, it was really outstanding.

As we all known the investment in a mutual fund is directly related to the stock market.

Mutual fund industry introduced in India in 1963 through “Unit Trust of India” 

and till today mutual fund industry shows its VI phases:

  • Phase I – 1947 – 1987 –
  • Phase II – 1987 – 1993  – Entered in Public sector
  • Phase III – 1993 – 1996
  • Phase IV – 1996 -1999
  • Phase V – 1999 – 2004
  • Phase VI – 2004 – onwards

Also Read: What is Shareholding Pattern – Is it really works for an investor?

Disclosures on Fixed Deposit

Fixed Deposits (FD) are the simple phenomena is to deposit your money with banks or other financial institutes which provide interest on your deposit.

There are several segments of fixed deposit available in the market in today’s scenario looking at the requirement and demand of the people.

Fixed Deposit is the safest investment segment in which you only will get the return and there is nothing to lose.

You will get the interest rate according to the norms of RBI if banks involved.

The interest rate is variable which was declared by banks due to movement of CRR & SLR (we will discuss in the next article about these terms).

Fixed Deposit or Mutual Funds – which is better

Currently, if we go through the market the rate of return from the Fixed deposit is low as compared to the rate of mutual funds:

Also Read: Understand Tax saving options : 80C, 80CCC, 80CCD, 80D, 80U, 80E, 24

the only condition is you have to be consistent with the mutual fund investment and the time horizon take is also long-term.

Some people also said that mutual fund is the best alternative to fixed deposits.

There are a lot of experts available in the market and there are several mutual funds companies available to serve you with there different schemes and investment plans.

I also like to share my personal experience with both mutual fund and fixed deposit: I usually diversify ith investment in both FD and mutual funds. I use to invest in Fixed deposit for 1 years horizon because if the need money due to an emergency, I only have to wait for maximum one years, after maturity one repeat my deposit, but this time, my rate of the return is dropped.

Whatever the reason as an investor I don’t care.

On the other hand, I made a SIP (Systematic investment plan) on Invesco mutual fund – banking fund I ask my financial planner for one year as I usually do, he accidentally did it for 5 years monthly basis ₹ 1000 per month. 

But it works for me, after 5 years of consistency investment I have received the return of 72 % on my investment. I have decided to continue my investment in a mutual fund.

Also Read: What is Return on Capital Employed 

The selection of a fixed deposit vs mutual funds depends upon the requirement and time horizon both are good and you can trust them.

My personal portfolio investment consists of 23 % of mutual fund 25 % of Fixed deposit 18 % of cash for emergency and 21 % of direct equity investment and 13 % of recurring and PPF deposit.

My portfolio seems old fashioned but, it’s pure diversified.

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