The Fixed Deposit
Investment decisions made without prior thought, consideration and research can prove to be detrimental for one’s financial health. For most investors, the two aspects of investments that take maximum of their attention include the risk and returns. The right balance between these two factors is found in case of PPFs, FDs, and even mutual funds.
Fixed Deposits are financial instruments offered by banks and NBFCs wherein the investor deposits funds for a particular tenure to earn returns. PPFs require the investor to deposit money for up to a particular time and gain returns when the term of deposit ends. Mutual Fund Investment are made on company stocks and shares and the earnings are based on the performance of the company in the stock exchange.
Here, we are comparing the key aspects of all the three investment options named above:
Both PPFs and FDs are tenure bound- this means that the amount invested and the returns from them are received at maturity. Mutual funds do not have a lock-in period and the funds can be accessed at any stage of the investment.
Safety of Returns
Returns from FDs and PPFs are independent of market fluctuations, which means that unless there is any economic policy issued by the Reserve Bank of India, their returns are unchanging. Returns from mutual funds are subject to market conditions and the actual returns can vary significantly from the indicated returns.
Tips to know Which is Better Saving Account or FD or Mutual Fund
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.