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Mutual Funds | 31 Oct 2019

Mutual Funds vs Fixed Deposit for Smart Investment

A fixed deposit is a financial investment instrument that offers a higher rate of interest to the investors until the decided date of maturity compared to a savings account. A fixed deposit has pre-decided returns that remain the same throughout the tenure of investments. Whereas, a mutual fund is an investment instrument that uses money from various investors to invest in stocks, bonds, etc. Mutual funds provide higher returns when it comes to long-term investments as they are associated with the market. If you get in touch with a financial consultant in Pune or consultants and advisors from other cities of Maharashtra for deeper insights into smart investments, you will understand how mutual funds are the best option for investments.

The mutual fund industry has observed enormous growth in the past couple of years, mainly because of the advent of better schemes and the changing mindsets of people. In India, the mutual fund industry has seen a massive rise in Assets Under Management. Between April 2018-February 2019, the total AUM stood at Rs. 23.80 trillion (US$ 340.48 billion). As of June 2018, the number of equity portfolios in mutual funds reached 74.6 million, and this is not it, The Association of Mutual Funds in India targets five-fold growth in AUM to Rs 95 lakh crore (US$ 1.47 trillion), and in investor accounts, the growth is predicted to reach 130 million by 2025.

Factors that make Mutual Funds a smarter option for investments-

  • Mutual funds reduce risk through diversification of investment.
  • SIPs start from amounts as low as 500 INR.
  • Mutual funds offer high returns.
  • Professional financial experts manage funds on your behalf.
  • The surplus amount is conveniently allocated to your existing portfolio.
  • Mutual funds offer various modes of investment - Systematic Transfer Plan, Systematic Investment Plan, Lump sum.

You must make your decision on the basis of your risk appetite, time span, and investment goals. You may get good funds at low prices. Although FD has been a popular form of investment for years, it somehow lags behind due to the rigid nature of its returns. One primary reason that so many people used to invest in FD and still do is that people want financial security; they want to save money for different goals and plans. However, the scenario has changed due to the rapid evolution of businesses and industries, people don’t just want to save money, they also wish to gain better returns and higher profits, they are looking for smarter investment options, and this is how mutual funds are taking over. Therefore, when the interest rates are at a peak, and you observe various prospects for financial and economic growth, it makes sense to go for mutual funds instead of fixed deposits.

For any queries, get in touch with us.

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