Are you looking for some safe bets while investing money? Nobody wants to depend on a single income, but with changing lifestyles and expenses, people want to create a second source of income. The question that arises here is, “Which is a better way of saving- mutual funds or fixed deposit?”
What’s the return?
If you are looking for a positive assurance and a predetermined rate of interest, then, investing in the fixed deposit is a good idea. However, mutual funds investment depends on the market’s performance. And there is no conviction that you will get the promised amount. It all depends on how the market performs.
Is there any perfect time or should you dare to jump?
Fixed deposits are absolutely and unquestionably zero-risk investment. On the other hand, mutual funds work on the principal of change in the market’s performance. The investor can gain if the market is favourable and lose in case the market takes a downward step.
Untimely withdrawal of funds
If you are planning to make a bit previous withdrawal on your fixed deposit, you may require paying a small penalty. However, to make an unanticipated withdrawal from the mutual funds doesn’t require paying any penalty. You may need to pay 1% exit charges of the total fund invested in case the withdrawal is premature.
You gotta pay the cost
Though it may sound funny to read that it costs $0.00 to treat someone with respect. However, if you want to invest in mutual funds, you need to pay some cost to the portfolio manager. However, no such cost incurs in case of fixed deposits.
Investing in both mutual funds and fixed deposits can’t be called as a high maintenance activity. If you choose well, you can invest more. In mutual funds, your portfolio gets diversified. However, in fixed deposits, it is fixed and promises an assured rate of interest on your investment.
If you are reluctant to take any risk but still want to try your luck in mutual funds, then, try investing in a short-term period of 3 years. Once, you meet your financial goal and also gain as per the market’s performance, you will be puffed up to try more and win more from the market.