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A Fixed Deposit (FD) is a financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the given maturity date. It may or may not require the creation of a separate account.
Fixed deposits are a high interest yielding Term deposit and offered by banks in India. The most popular form of Term deposits are Fixed Deposits, while other forms of term Deposits are Recurring Deposit and Flexi Fixed Deposits.
Features of Fixed Deposit
Benefits of Fixed Deposit
A mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets. Mutual funds are operated by professional money managers, who allocate the fund’s investments and attempt to produce capital gains and/or income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus.
Benefits of investing in mutual funds:
Mutual funds are usually very liquid investments. Unless they have a pre-specified lock-in period, your money is available to you anytime you want subject to exit load, if any.
Investors can benefit from the convenience and flexibility offered by mutual funds to invest in a wide range of schemes.
Low transaction cost
Due to economies of scale, mutual funds pay lower transaction costs. The benefits are passed on to mutual fund investors, which may not be enjoyed by an individual who enters the market directly.
Funds provide investors with updated information pertaining to the markets and schemes through fact sheets, offer documents, annual reports etc.
Mutual funds in India are regulated and monitored by the Securities and Exchange Board of India (SEBI), which endeavors to protect the interests of investors. All funds are registered with SEBI and complete transparency is enforced.
Bank FDs of amount up to Rs. 1 crore with a term of one year fetch interest at a rate ranging from 6.6 per cent to 7.10 per cent in major banks. Mutual fund investments, however, are marked-linked. This means the return varies from one fund to another. While FD is the safest form of investment, it has a limited upside return. Investors looking for inflation-proof returns can alternatively invest in debt funds or large cap equity funds with medium to moderate risk.
Gold is a unique asset: highly liquid, yet scarce; it’s a luxury good as much as an investment. Gold is no one’s liability and carries no counterparty risk. As such, it can play a fundamental role in an investment portfolio.
Gold acts as a diversifier and a vehicle to mitigate losses in times of market stress. It can serve as a hedge against inflation and currency risk.
Reasons to invest in Gold
Safety, Returns and Liquidity are the three criteria to look for before making any investment.
Investing in mutual funds or investing in Gold will definitely help to get good amount of returns, but in order to look for long term returns we should have a look at the returns offered by both instruments over a period of time. Mutual Funds and Gold are both completely different things. Returns and risks involved in Gold as well as Mutual Funds vary a lot and also these are available in different variants.
Reasons to avail Mutual Funds
Reasons to avail Gold