Why are investments necessary? The answer is simple - to create wealth! In today's times, earning money is not enough. You must find opportunities to grow your earnings and reap the benefits out of it. Hence, investments are necessary - to grow your earnings and fund your needs.

For example, if you have been eyeing a certain luxury item, say, a smart TV or an iPhone X, but don't have the money readily available for it, you can look at either saving for it or investing it in a financial scheme which can guarantee good returns.

There are many investment options available out there. Some of the widely used ones include Fixed Deposit Savings, Mutual fund Investments, Stocks and Bonds, Pension schemes, Public provident fund, etc.

Fixed Deposits Vs Mutual Funds

Fixed deposits are monetary instruments that are offered by banks and NBFCs where you can deposit a lump sum of money to yield a higher rate of interest as compared to your savings account. The deposit can be made for a specific period ranging from 7 days to 10 years.

Withdrawals can't be made before the date of maturity in the case of an FD account. A premature withdrawal calls for a penalty on the customer. Ideal for traditional investors, fixed deposits come with no risks. However, the interest rates are subjected to change depending on the economic factors.

Mutual funds, on the other hand, are less stable but guarantee a higher return on investments. Also, they don't have a specific lock-in period like fixed deposits do. They are also flexible in nature and the tenure depends upon the type of scheme or plan.

It is easier to make withdrawals with respect to mutual funds. However, if the withdrawal is made in less than a year, an exit load must be paid by the customer. After a year, there is no exit load charged.

So, the real question is - are fixed deposits enough?
It truly depends on the goals of the customer. If the goal is to save lumpsum amounts of money, then an FD account is the best option. However, if the goal is to earn better returns and multiply wealth, one must also invest in other avenues like mutual funds.

The idea is to plan your investments in a good fashion and take the right call. The kind of investments yo u make depends heavily upon your monetary goals.

Learn more about Mutual Funds here.

DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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