The Difference Between Fixed and Mutual Funds

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Topic of discussion is fixed deposit vs mutual fund. We see the older generation always asking the younger generation to put their money in a fixed deposit in a bank because they seem safe whereas investing in a mutual fund or stock market sounds risky. Explaining the depths in detail the Mutual Fund SIP Advisor has briefly discussed the differences between both. Also, the Mutual Fund SIP Advisor has provided clear definitions with the probability of risks involved in the subjects. Giving clear and up to the mark information, one must go to the Mutual Fund Sip Advisor for any doubt or query.

Now the question must arise in the minds of the reader that what is exactly risky. The probability of losing money is higher in the stock market with respect to banks hence it is risky. But the bigger fact is the interest rates given by the banks are always less than the inflation rates which in reality means that people lose money by keeping their money in banks with respect to earning the so called interest over it and locking the money for such a big amount of time.

Let us get clear on definitions first:

What are Fixed Deposits?


  • In fixed deposits, there is no pooling of money by a group of investors. Instead, as the name suggests, it involves generating interest by keeping a sum of money fixed for a certain period or tenor.·This tenor usually ranges from one year to five years.
  • Fixed deposits are beneficial as the rate of interest paid is higher than that of a savings account.
  • This interest, combined with the principal, is returned to you at the maturity period.
  • You can invest as little as Rs.25, 000 in a fixed deposit with minimal documentation.

What are Mutual Funds?

  • A mutual fund is where many investors come together with a common goal of increasing their money.
  • Investment is made in equities, bonds, money market instruments and/or other securities.
  • The income earned through these investments is then equally distributed among the investors. This is done after deducting the expenses incurred.

In a nutshell, after giving the data important for the investor of either FD inclination or MF inclination, one thing is sure shot, one must be investing in order to stay financially healthy. Now as for where to go, then the choice is yours, you know the best. Choose your future wisely by considering all the facts and hence, take a long-term decision.

Investors who put their money in safe bets such as bank fixed deposits and gold saw better returns than mutual funds, equity and real estate investors in 2018. A one-year bank fixed deposit (FD) earned a return upwards of 6.5 per cent along with capital safety, whereas gold gave a return of 7.1 per cent in 2018.

However, before the end I need to write this last statement, which is always true.


Mutual Fund investments will be subject to market risks. Any mutual fund listed in the document does not guarantee fund performance or its underlying creditworthiness. Do read the mutual fund document thoroughly before investing. Specific investment needs and other factors have to be taken into account while designing a mutual fund portfolio.

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