Fixed Deposit vs. Mutual Fund: Which is the Right Investment Option?

While speaking of risk-free investment options, fixed deposits might be the first option that will come to your mind. However, there are many who prefer investing in market-linked instruments like mutual funds. If you want to know which is the right investment option for you then you should take these things into account:

Better option for short & long term 

Fixed deposit plans come with a flexible tenor range. Therefore, you can use it for planning your finances for both short and long term. Mutual funds provide good returns over a long tenor and therefore, it might not provide enough returns over a shorter period. 

Assured returns 

As fixed deposits grow your deposits at a fixed rate, you can predict the returns beforehand. Also, their interest rates remain the same as they do not depend on market conditions.

The returns of mutual funds cannot be predetermined as their interest rates fluctuate as per the market conditions. 

Types of investment options 

Fixed deposits come in two variants viz. cumulative and non-cumulative FDs. Non-cumulative FDs allow you to withdraw your deposits periodically. It is suited for those who need some extra funds to manage their regular expenses. 

The later one locks-in your deposits for the entire tenor and does not give away interest earnings in the form of periodic payouts. Therefore, it’s returns are slightly better than the former one. 

Mutual funds are available in three forms viz. Debts, Equities, and Hybrid Funds. Debt Mutual Funds are recommended because they invest your corpus more in corporate securities and government bonds and less in equity markets that are highly volatile. As a result, your investments are exposed to fewer risks in debts. 

If you are looking for a risk-free option that would also generate enough returns then Bajaj Finance FD is the perfect investment option for you. This is because it offers an interest rate up to 7.25% that is one of the highest FD rates in India. It is also considered safe as it has received high ratings from credit rating organizations like CRISIL and ICRA. The other benefits of investing in its FD plans are mentioned below: 

Higher FD rate to Senior Citizens 

Senior citizens are eligible for an additional FD rate of 0.25% if they prefer to invest in Bajaj Finance FD. However, even if you are a non-senior you can earn at 0.10% higher FD interest rate by investing online using the online FD form. This form is provided on its website and you can also track your investment by using Experia – the customer portal of Bajaj Finance. 

Minimum deposit amount 

You just need to deposit Rs. 25000 for investing in any of its FD plans. Also, if you are not sure about the plan and tenor, then you can check its FD calculator that will help you to choose the best FD plan as per your tenor and financial plans. 

Multi-deposit facility 

By investing in this FD scheme, you can choose a tenor from 12 to 60 months for your deposits. Also, you can invest in more than one FD and choose the tenor, FD type, and amount as per your convenience. This allows you to ladder your deposits and this provides you with more liquidity points in a year. You can also consolidate your maturity proceeds and club them into a cumulative FD to multiply your returns over a longer tenor. 

With so many benefits and features, you certainly cannot afford to overlook its FD plans if you are thinking of growing your investments swiftly without any risks.

Fixed deposits and mutual funds are entirely different instruments as both of them differ when it comes to investment method, tenor, returns, etc. However, considering the present situation, it is better to invest in a stable instrument that also offers good returns. Bajaj Finance FD is offering an interest rate of up to 7.25% and this FD rate is high enough to make your fixed deposit double in 5 years. The higher FD rate offered to senior citizens, easy online mode of investment, and features like multi-deposit facility make it one of the best instruments when it comes to risk-free investment options.

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