Gold Vs Fixed Deposit (Fd) Vs Mutual Funds: Which One Is Good for You


Indian investors have always preferred conventional instruments, such as gold and fixed deposits. At the same time, mutual funds are rapidly emerging as a popular financial instrument to invest in. Each of these instruments provides unique offerings for investors.

Here’s all you need to know about the popular choices to pick the best one for you:


Indians have upheld their love of buying, wearing, and owning gold for long. Gold is the conventional way of investment in most Indian households. Investing in gold involves a lesser amount of risk and is highly liquid. Gold is a good option for diversification as it can act as a saver when the market is down. Investing in gold does not require a lot of knowledge and research. So, if you are too caught up to track the market, gold may be the right way out for you. 

Despite a lot of benefits of investing in gold, you might face some problems as well. You will have to invest a significant amount to get substantial returns whereas, in mutual funds, you can start from Rs. 500 or Rs. 1000 a month. Also, physical gold runs the risk of being stolen. So, it is recommended that you store it in bank safety lockers.  

Fixed Deposit

A fixed deposit is a popular investment option offered by banks and NBFCs where you can invest your savings for a particular period and receive a fixed interest for that duration. The interest rate of FD is higher than that of a savings account. The interest rates for senior citizens are even higher. Fixed Deposits do not carry any risk as the returns are guaranteed. Since the risk is low, the returns of a Fixed Deposit may also be lower as compared to other investment options. However, if you need the money before the maturity date, interest penalties may be imposed. Look for lenders offering some of the highest FD rates in India to get the most returns.

Mutual Funds

Mutual Funds are offered by asset management companies. A mutual fund is a pool of investment which is formed by collecting investments from retail and corporate investors.  Professional fund managers handle this corpus. They invest funds in a variety of asset classes and generate gains for investors. A major advantage of investing in mutual funds is that you can even start with investing as low as Rs. 100 per month. Also, you can escape the hassle of tracking the market as your money is being taken care of by experts in the field. However, mutual funds are subject to market risks, so a market crash might affect your savings too.

The burning question is where should one invest to get maximum benefits with minimum risk. There is no such investment that is just perfect for everyone. Investment choices vary among people depending on their risk-taking capacity, investment amount, time for which they want to invest, etc. It is important that you not only choose the best investment option for yourself according to your needs but also diversify to secure your savings against future ups and downs.

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