Cyber Journal 24, October 07, 2015
Confusion prevails even as several banks keep offering new rates of FDs every alternate day through various mediums. How to protect your hard-earned money in spite of reigning confusions? Nitten Gokhaley finds out more:
Is investing in fixed deposit better than investing in mutual funds? Let’s take a look at some simple points to understand differences between fixed deposit and mutual funds.
What is mutual fund?
Mutual fund is a trust that pools the savings of several investors and then reinvests these funds into different kinds of securities such as- shares, debentures, money market instruments, or a combination of these. The income thus generated and the capital appreciation is distributed among mutual fund unit holders in proportion to the number of units held by them. The three types of funds are- Open-ended, Closed ended and Interval schemes.
There are several public and private asset management companies (AMCs) which are involved in trading of mutual fund. Some of the popular asset management companies are- SBI mutual fund, Kotak Mahindra mutual fund.
After realizing that MFs offer great benefits, India’s rapper Baba Sehgal wrote and dedicated one of his songs to Mutual Funds!
What is fixed deposit?
Fixed deposit is a deposit scheme in which an investor deposits his money with the bank for a fixed period of time at a predetermined interest rate. Compared to savings account, it offers higher rate of interest to the investors. Investment term depends on the scheme which investor decides to invest in. There are several nationalized and private sector banks offering various fixed deposit schemes for investors. The minimum number of days that the investor needs to lock-in his fixed deposits is 7 days.
Interest rates are slightly more for senior citizens. Fixed deposits are deposits made for certain period of time. However, most of the banks allow their customers to cancel their deposit and withdraw their money within few hours from application. This form of investment can be encashed and used during the time of emergency. In case of cancelling fixed deposit before its term, most of the banks pay less interest amount to the investor.
- Investing money in mutual fund is risky compared to investing in fixed deposit.
- Your investment in fixed deposit can help you to earn assured amount of interest, which is not possible in case of investing in mutual fund.
- Redemption of mutual fund is a time consuming procedure, on the other hand, you can cancel your fixed deposit and encash your investment within few hours.
Nitten is a freelance journalist, and has worked with renowned newspapers and news agency in India. If you are looking for desktop journalist or SEO content writer, you can email Nitten- firstname.lastname@example.org
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