People who make long term investments are always confused about whether they should invest in mutual funds or in fixed deposit schemes. This is because while both investments have their advantages, there are disadvantages as well. When we invest money in fixed deposit scheme, then that money is used to give loans while mutual funds are used in the stock market. So there is more risk, but FD is a risk free investment.
Advantages and disadvantages of fixed deposit schemes and mutual funds
The bank gives the loan of FD money to different people. Then the interest earned from them is returned to the customers. The bank has a large number of customers, so the risk is reduced there. Also, insurance is also free on every FD. At the same time, the money of mutual funds is invested in the shares of 25-100 companies, due to which the risk here is more. The biggest difference between the two investments is that FDs are guaranteed returns, whereas mutual funds do not.
Mutual Fund
Whenever someone invests money in a mutual fund, companies invest those money in the stock market. Due to investing money in the shares of different companies, the risk is not as much as it appears. Because when companies invest money in the stock market, they also do all the checks. But it is a risk oriented investment.
Where will you get more returns
Now the question is, where do you get more returns? Suppose you have invested one lakh rupees in FD, then according to the current rate you will get Rs 1.79 lakh after 10 years. At the same time, if you invest this much money in mutual funds, then you will get 3.40 lakh rupees, if we look at the returns of the last 5 years, then it can be more and less. Mutual funds can be a best investment option for someone who wants to take the risk. At the same time, FD will be the better option for investors who do not like risk.
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