Mutual Fund vs Fixed Deposit

Here is the article to read, if you are interested to know about mutual funds and fixed deposit schemes

Fixed deposits and mutual funds are the traditional financial investment platforms preferred by a huge population in India.The popularity of these financial schemes has grown progressively over the past few years. As per the most recent research conducted, mutual funds comprise 7 percent of household savings and the mean annual growth has reached 17 percent.Let us compare mutual fund vs fixed deposits and decide the best financial platform to begin your investment right away. It’s essential to save money to lead a happy and peaceful life.

What Are Mutual Funds?

A mutual fund is a saving platform that collects money from a group of Investors.The invested mutual fund amount will be deposited in stocks, bonds, and much more. Finally, the revenue generated on mutual fund investment will be equally distributed among the stakeholders.Investors can pick the most reliable schemes offered.Mutual fund schemes are categorized into equity funds, debts, money market funds, hybrid funds, growth funds, income funds, liquid funds, fixed maturity funds, retirement funds, high-risk funds, and tax saving funds. Among the category of mutual funds, high-risk mutual funds offer huge returns. Also, SIP mutual fund, the systematic Investment plan permits investing money systematically at predetermined intervals.You can pick reliable mutual fund schemes that suit your financial requirement.The amount invested in mutual funds india can be withdrawn at any time. SIP investment plans are widely preferred by mutual fund Investors.

Mutual Fund vs Fd Deposits

Let us now compare the features of mutual funds, fixed deposits and decide the best financial platform to choose.

Returns On Investment

Fixed deposits offer an interest rate based on the amount deposited.On the other hand, the returns on mutual funds are centered on the amount invested. You can expect huge returns on mutual fund investment if you pick the best schemes. Returns on fixed deposits are less prone to market risks and fluctuations. Also do not change before the tenure. Whereas the returns on mutual fund investments depend on market fluctuations.

Cost Of Investment

When compared with fixed deposits, the overall cost of mutual fund investment is low. You can easily access or invest in mutual fund schemes from any locality through various online platforms. Also, mutual funds offer reliable schemes based on financial requirements.

Liquidity

The term liquidity signifies the flexibility of converting assets to cash. Mutual funds possess a high liquidity rate whereas fixed deposits have a medium to high liquidity rate.

Risk Factors Involved

As the return on fixed deposit is fixed, the investors need not worry about market fluctuations. On the contrary, the returns on mutual funds are prone to market risks and fluctuations.Even though there are risk factors involved in mutual fund investments, mutual fund managers or professional experts can easily handle the crisis and help the Investors to complete the Investment process.

Lock In Period

The term lock-in period signifies the duration or period in which the invested amount of money cannot be withdrawn or sold.Mutual funds do not have a fixed lock-in period. When it comes to fixed deposits, the lock-in period is 5 years.

Tax Saving Mutual Funds- Mutual Funds Are Tax-Friendly

Mutual fund investments are tax-friendly when compared with other financial investment platforms.The short-term capital gain in equity mutual funds are taxed at the rate of 15 percent whereas the long-term equity funds are taxed at 10 percent.The dividends on equity mutual funds are tax-free. On the other hand, the income generated on a fixed deposit scheme is taxable and are considered as income from other sources. You can choose the tax-saving mutual fund schemes to begin your investment.

Fixed Deposit or Mutual Funds? Which Platform Is The Best?

Before selecting the investment platform, it’s good to compare the features of fixed deposits, mutual funds. Both fixed deposits and mutual funds have unique features.These financial investment schemes function as a source of income during emergencies. Declining interest rate is the major concern when it comes to fixed deposit schemes. Hence it’s better to go for mutual fund investment if you are planning for a long-term investment. It’s equally important to study the financial goals and consider the market condition, and risk factors before choosing reliable schemes.To begin your investment, we suggest the reputed firm, Shriram mutual funds functioning across various locations in India. If you are planning for long-term savings, investing in a mutual fund scheme is the best choice.

How To Invest In Mutual Funds?

It’s easy to invest in mutual funds. To begin investing in mutual funds, you can create a mutual fund account and pick reliable mutual fund schemes. It's required to provide the KYC information. Meanwhile, decide the amount to invest and choose compatible mutual fund schemes. You can begin the transaction as the final step. The entire process of mutual fund investment will be tedious, if you are a beginner. You can get help from mutual fund managers or financial advisors to complete the mutual fund investment process, learn how to handle the risk factors associated with the investment.

Start your savings journey right away by investing in mutual funds. You can check or track the performance record of tax-saving mutual funds to pick compatible investment schemes.

Meta Description: Let us compare the features of mutual funds and fixed deposits. If you prefer a secure platform to begin your investment, mutual fund is the right choice.