The age-old debate between FDs and mutual funds continues. Both have their place in a well-diversified portfolio. Here's how they compare.
Fixed Deposits (FDs)
Returns: 6.5-8% per annum (guaranteed)
Safety: Capital protected; up to ₹5 lakh insured by DICGC
Liquidity: Penalty for premature withdrawal (0.5-1%)
Tax: Interest fully taxable as per income slab
Best for: Short-term goals, emergency funds, senior citizens
Mutual Funds
Returns: 10-15% (equity), 6-9% (debt) — historical, not guaranteed
Safety: Market-linked, no capital guarantee
Liquidity: Easy exit (except ELSS with 3-year lock-in)
Tax: LTCG over ₹1L at 10%, STCG at 15% for equity; 20% with indexation for debt
Best for: Long-term goals, wealth creation, retirement
Use our FD Calculator to check exact FD maturity amounts. Use our SIP Calculator to project mutual fund returns.
Comparison Example: ₹5 Lakh for 5 Years
Verdict
Use FDs for goals within 1-3 years and emergency funds. Use mutual funds for goals 5+ years away. A combination of both provides stability with growth.
Calculate your FD returns with our FD Calculator and compare with Lumpsum Calculator for mutual fund projections.
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Written by
Rahul Sharma