Скачать или смотреть FD vs Debt Mutual Funds, where should you invest for the short term?

Factors of debt mutual funds making it still a better investment than fixed deposits:

1. Mode of investment

You can invest a lumpsum amount or monthly while investing in debt mutual funds. But in fixed deposits, you can only invest in lumpsum. A monthly investment option is not available.

Recurring Deposit (RD) does provide the option to invest monthly, but then the returns are low compared to fixed deposits.

2. Returns

Currently, fixed deposits offer a return of about 7-9%. Sometimes, they offer better rates than debt mutual funds, but this is not always true. Interest offered on fixed deposits keeps changing, and maybe next year's returns would be around 6-7%.

Whereas in debt mutual funds, the interest returns are between 7-9%, and there are chances of gaining a capital gain. So, on average, the returns offered by debt mutual funds are higher than those offered by fixed deposits.

3. Liquidity

Debt mutual funds are more liquid than fixed deposits. You can redeem your investment in debt mutual funds, and the funds will be credited to your bank account within a few days.

In contrast, fixed deposits have a lock-in period, and you cannot withdraw your funds before the end of the tenure without incurring a penalty of 0.5 to 1%.

There are two more important factors which can solve your dilemma of investing in FD or debt mutual funds in the short term.

Read about them in our latest blog.

Link - https://blog.vrid.in/2023/04/06/fixed...

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