Fixed Deposit Vs Mutual Fund: In today’s era, everyone is searching for a way to make money. Investment is a way to earn money, but it comes with risk factors & different forms.

There are investments that don’t have risks but yield lower returns, like Banks Deposits, FDs, RDs & Endowment Plans. There are also many risky investment options. That kind of investment option, like equity, ESOPs, and mutual funds, falls into the risky investment category. Between these two types of investments form people mostly prefer FD and mutual funds. In this blog, we are going to compare the different between Fixed Deposit Vs Mutual Fund, which is better for investment.

Mutual Fund Vs Fixed Deposit

A mutual fund is a type of investment option that collects funds from multiple investors to invest in a diversified portfolio of equity, debt, government bonds, and other private equities. We can choose mutual funds for low and moderate risk because they are managed by qualified fund managers who invest in diversification. When it comes to risk-free investments, we can consider banks fixed deposits, which are slightly beating the current inflation rate of the country.

In this regard, we consider fixed deposits to be safe because the value of the investment will not decline and we will receive a fixed income. And the positive aspect is that the return of FD beats the inflation rate of the economy. If you want to know which is better among fixed deposit and mutual funds, then continue reading this post.

What are fixed deposits?

Fixed deposit is a traditional investment choice for many people across the world. FDs are considered the most safe and secure investment. But its not as secure as said, the DICGC insures upto a maximum of ₹5Lakhs for each depositor in a bank. 

What are mutual funds?

Mutual Fund is a type of investment option that collects funds from multiple investors to invest in a diversified portfolio of equity, debt, government bonds, and other private equities.

Exploring the Differences Between Fixed Deposit and Mutual Funds

Fixed Deposit Vs Mutual Fund which is better
PerticularFixed DepositMutual Fund
ReturnsFixed interest rateMarket-based performance
RiskOften lowLow to high, depending on the type
ExpenseNo expensesExpense ratio: 0.25% to 5%
LiquidityLowGenerally high
Investment amount₹1000 minimum investment amount; often no maximumSpecified minimum amount; often no maximum
Early Withdrawal Allow Pre-mature FacilitiesAllow redeem at anytime with or without an exit load
TenureFixed tenure (7 days to 10 years)Often no fixed tenure; depends on investor preference
Taxation10% TDS on income exceeds ₹40,000Taxable as per the criteria
Fund managementNo fund manager requiredRequires a fund manager
FlexibilityLow, subject to a penaltyHigh, Various types of schemes are available
Regulating authorityReserve Bank of India (RBI)Securities & Exchange Board of India (SEBI)

When it comes, to investment, there are many options for investing. Mutual funds and FD are both widely accepted investment options. Bank Fixed Deposits is most preferred investment option in India.

Nowadays, FD also called as old-age investment option. Because there are money investment options that have higher potential returns than FD. Among these investment options, Mutual fund have emerged strongly.

Mutual Fund Vs FD

FD Vs Mutual Fund

Pros & Cons to Investing in a Fixed Deposit or Mutual Fund

If there many advantages of Mutual Funds over Bank FDs. But whenever it comes to risk and liquidation, Fixed Deposits are mostly preferred. Because in fixed deposit there are no chances to lose your capital. But in Mutual Funds it subject to volatility of market & holdings value. But the last five years of historical data records say mutual funds have done better than FDs compared to growth and much better than the inflation rate.

Lets explore the pros & cons of Fixed Deposit Vs Mutual Fund before investing in it.


We hope this comprehensive post, Fixed Deposit Vs Mutual Fund will help you make a decision about your investment based on your financial goals. We state all the consider factors between Mutual Funds Vs Fixed Deposits. Thank you for giving your valuable time to read our post.

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