Before you pick an investment option from mutual fund and fixed deposit it is better to have a financial roadmap. This will help you better divide your funds based on immediate needs or for future. You can check aggregator sites to learn more.
Let’s look at crucial differences between mutual fund and fixed deposit to help you take an informed decision. #1 Risk Fixed deposit is a zero-risk investment as it is free from market fluctuations. It lets you earn interest on a fixed amount which you can withdraw before maturity or at maturity of the deposit. Mutual fund is subject to market fluctuations even though the investment covers a range of stocks within a fund. So, eventual gains depend on existing market conditions and hence can be fluctuating. #2 Return on Investment Fixed deposit offers an appreciable fixed interest income on the deposited amount over the specified tenure. Mutual fund income could be potentially higher or lower based on your judgement and investment in the market. Rising market results in good earnings while falling market
#3 Withdrawal
Fixed deposits will let the depositor make a premature withdrawal though there will be small charges. On withdrawal at maturity of the deposit the depositor can save tax by filling up Form 15G and Form 15H. Mutual funds will let the investor make a premature withdrawal if the minimum holding period is complete. But, there will be an exit load charge (around 1%) in this case.
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About Author:Aman is working in the domain of Investment management in one of the top universities. He has published research papers and case studies in Investment and Fixed Deposit marketplace. He is an avid blogger in the domain of Investment management. you can also find him on social networking platforms. Archives
August 2022
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