Fixed Deposits Vs. Other Investment Options: Which is the Right Choice?

The evolution of India’s financial market has brought numerous long-term and short-term investment options. And fixed deposit is one of the primary and popular ones among these alternatives. Moreover, with a dedicated app for fixed deposits, you can easily invest in it as well.

However, every investment option comes with its set of pros and cons, and a prospective investor must consider those before moving ahead. Therefore, individuals must eventually choose investment alternatives that cater to their unique needs and ensure their financial security and long-term growth on Login tutore.

So, let’s pit FDs, the most secured investment option, against others to see what can be the ideal choice for you.

Fixed Deposits Versus Other Investment Options

In order to choose the right investment option, it is important to weigh in different alternatives and analyse the particularities. Only then one can make an informed decision.

1. Fixed Deposit vs Mutual Fund

A Fixed Deposit is where you deposit a substantial amount for a specific span and earn a predetermined interest rate. This investment option extends a fixed return, which is ideal for risk-averse investors. On the other hand, other investment choices, like mutual funds, are directly linked with market fluctuations. Hence, one cannot expect to earn stable returns from them.

Fixed Deposits are the most reliable savings option where the invested amount is protected., and the interest earned guaranteed. However, there are costs related to mutual funds investment which is on the higher side.

2. Fixed deposit vs Bonds

Fixed deposits are better options for those who are looking for risk-free, long-term, and easily accessible investment choices. On the other hand, investors looking to earn higher returns on maturity must go for investing in bonds.

Furthermore, secured bonds are backed by collateral, whereas fixed deposits are not backed by any collateral, proving a good option for those who do not want to risk their possessions. If one wishes for portfolio diversification, he or she can invest in both options.

3. Fixed deposit vs real estate

Real estate is another great investment option; however, one needs a relatively considerable sum of money to invest in real estate. On the other hand, while opening an FD, one does not require lump sum money. Even with respect to transparency, the real estate sector features asymmetric information, wherein buyers cannot always authenticate the property’s details. However, with fixed deposits, one can easily keep track of the investment online via an investment app.

Also, the process involved in real estate investments is lengthy. One has to assess the property location, infrastructure, and availability of amenities, know the market worth and scrutinise the builder’s credibility before going ahead with the investment. On the contrary, the fixed deposit investment process is simple. You can easily invest in an online FD under any renowned financial institution through a mobile banking app from the solace of home.

4. Fixed Deposit vs Stock market

The stock market is another investment option that will help one earn higher returns and offer security against inflation. Though the stock market comes with benefits like no limitation on returns, no fixed tenure, gives access to the global market, etc., numerous monetary risks are involved Soldelhiuniversity.
Fixed deposits (FDs) offer a guaranteed return on investment for the entire deposit. It is not affected by market fluctuations and hence is highly safe. In addition, fixed deposit investments allow one to reap most of the premature withdrawals. It is with fixed deposits that one gets acquainted with disciplined savings options.

5. Fixed deposit vs Gold

Investing in gold is comparatively easier than investing in a fixed deposit. However, one needs a lump sum amount to go ahead with such investment options. Also, gold prices are volatile and fluctuate depending on several factors. On the other hand, the rate of return on fixed deposits is predetermined and known beforehand.

In addition, fixed deposits can be withdrawn before the maturity date and hence are considered liquid assets. In contrast, gold is a considerably illiquid asset that can be quickly sold at a fair price. Even with respect to storage, investing in fixed deposits proves beneficial. Fixed deposits (FDs) are held in bank accounts; on the other hand, gold must be stored securely.

6. Fixed deposit vs life insurance

Both life insurance and fixed deposits are great avenues that allow one to secure their finances. Both are safe options and facilitate wealth creation. The main difference between the two investment options is that FDs cater to one’s requirements. On the other hand, life insurance extends financial security to the investor’s family in case of unforeseen circumstances.

In addition, both FDs and life insurance allow one to reap tax benefits. One can reap tax exemptions under Section 10(10D) and Section (80C) of the Income Tax Act. In the case of fixed deposits, under Section 80C of the Income Tax Act, tax saving fixed deposits will allow one to reap tax deductions of up to ₹1.5 lakhs. Even there are different provisions for senior citizens.

Final thoughts

In conclusion, several investment avenues are available today; however, before choosing an investment option, factors like liquidity, returns, risks, etc., must be analysed thoroughly. This is how one can dodge threats and secure their hard-earned income. Individuals who wish to take a safe route can choose fixed deposits and check the status on their financial institution-designated app for FDs.

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