MUTUAL FUNDS VS FIXED DEPOSITS – Know all about the comparison of Mutual Funds and Fixed Deposit at Exeotacards.in. When i go to invest my money, a question occurred in my mind where can i invest my money. Read this article a decide which investment option should you opt.
Mutual fund is basically a scheme in which people invest money and that money will again transferred to the capital market by the officials for the purchase of different shares, bonds etc. It is a much easier process to invest in a mutual fund scheme as you compare it with buying individual shares or bonds. The profit would be distributed according to the number of mutual funds you bought it from the company. Investors can easily sell their shares when they want to sell it. Investing in mutual funds are highly suitable for the common people that don’t have too much knowledge about the market because their money would be invested in a managed portfolio under the supervision of a professional which reduces the risk of loss to the investors.
Fixed Deposit is the financial offering by the banks in which investors can invest their specified money for a particular time period and for that they will get interest on their money which is compartivelly higher than the saving account interest rate. This investment is consider as one of the most safest investment offered by any banks or financial institutons. Banks may or maynot open a separate account for the fixed deposit of their client and also offer facilities like loan against fixed deposit money. The main criteria for fixed deposit is that the investor cann’t withdraw money from his/her account until the time of its maturity.
Pros & Cons of Mutual Funds
The main advantage of mutual fund is that your money will be invest in a divesified pool of investment plan which would be supervised by the professionals of the market.
Investors can buy mutual funds either directlly from the fund company or from any other third party.
Selling and buying of mutual funds are very easy process for the investors and investors can sell anytime when they want to sell his share.
Investors can easilly monitor their money on a regular basis as mutual funds offer dailly NAVs of scheme and quartelly newsletter informing about the details of the schemes, perfomance of the portfolio, etc.
Invetors do not need to pay any taxes on the divident amount offered by mutual funds.
Investor has no control over his portfolio as mutual fund money managers will run all the entire procedding of the funds.
If your portfolio is over diversified than you will be leads to an adverse effect on the retuns of your overall portfolio.
Pros & Cons of Fixed Depoits
Investing in fixed deposit in a bank is one of the safest method for investing money. Investor get higher rate of retuns as compare to savings account till the time of maturity of the account.
The risk involve in investing in fixed deposit is much lesser than buying stocks. If you choose a right bank than you will end up with a healthy amount i.e., sum amount along with interest amount of money at the maturity time of your account.
The fixed rate of interest will restrict your earnings to a limited level and you can not enjoy the feeling of higher earnings as you would enjoy in shares or bonds.
The interest received on fixed deposit is consider as normal earnings and investor has to pay tax on that income.
During the time of crises fixed depositers would be consider as the last to paid off. So it is very important to choose the right bank or institution to start your fixed deposit account.