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    Differences between Mutual Fund SIP and Fixed Deposits

    With a growing change being seen in the financial market, potential investors are confused as to where they should invest their money in. An investor who is new to the financial market can easily be drawn into making a huge financial mistake that can cost him/her a lot more than just money. With the financial market nowadays providing the potential investor various options where they can look to invest, it is quite natural for investors to get confused. Hence, it is not at all surprising to see that the potential investor getting confused between mutual fund SIP and fixed deposits.

    So, what is a Mutual Fund actually?

    Mutual funds are an investment vehicle which is usually run by an asset management company where investors can invest their money which is cumulatively put in securities, bonds, stocks etc. Mutual funds are registered with Securities and Exchange Board of India. The ones who are looking to invest a certain amount but are unsure as to where they should invest can look at mutual funds. The potential investor can also avail the guidance of professionals to make sure that the money invested bears fruits.

    What are mutual fund SIPs?

    When looking to invest in mutual funds, it always beneficial to start out by looking to invest through Systematic Investment Planning (SIP). This is because it enables the investor to start out with a minimum amount for a specific time period rather than investing a lump sum amount as is the case in fixed deposits. There are many kinds of mutual funds that exists in the financial market and one can look to invest in them through SIPs depending on the benefits that the investors are looking for.

    What are fixed deposits?

    Fixed Deposits (FDs) are the safest investment option available in the country as it is completely risk-free as well as guarantees safety of the money invested in it. It is the most sought after by the investors as there many benefits attached with FDs. Starting from providing a higher rate of interest as compared to regular savings account, availing loan as well as credit cards based on the FDs helps in fast tracking the process of selecting to invest in time deposits.

    Difference between mutual fund SIPs and FDs

    Though investing in FDs as well as in mutual funds through SIPs provide benefits to the investors depending on the goals they are looking to fulfil, there are certain differences among the two. Here, we take a look at the differences:

    • Amount Invested: The first difference that stands out among the two is the amount that the potential investor can look to invest. Unlike in FDs, one does not need to a huge lump sum amount to start investing in mutual funds through SIPs. One can start investing from as low as Rs. 500 which is quite beneficial for the one looking to invest.
    • Rate of Interest: The rate of interest offered on FDs is constant for the entire period and is pre-specified which is not the case in mutual funds. The interest rates offered in mutual funds tend to vary based on the market movement.
    • Risk involved: As stated that the rate of returns are constant for FDs, those who invest in FDs need not worry of their investments as they are assured that the amount deposited can be withdrawn without any loss. However, that is not relevant in the case of mutual funds. This is because the rates of interest offered in mutual funds tend to fluctuate depending on market conditions. In short, risks associated with investing in mutual funds even through SIPs is more than investing in FDs.
    • Value of money: When one invests his/her money, the prime motive behind it is to get good returns which can be put to work as and when needed. However, that is not always the case in today’s world, all thanks to inflation. So, it is imperative to take into account the inflation rate while considering to invest in FDs or mutual funds. It is worth mentioning that though the risks are higher when looking to invest in mutual funds, the inflation induced returns offered by mutual funds are better as compared to FDs.
    • Withdrawal: Another difference is that one needs to pay a penalty if the amount deposited in the FD is withdrawn before the end of the tenure, for which it was initially deposited. However, one does not need to pay any penalty if the money is withdrawn after the minimum holding period.
    • Cost of Investment: There is no cost of investment involved with regards to time deposits, which enables the investors to claim the entire rate of return. However, that is not possible in mutual funds as all of them involves a cost that varies according to the mutual funds one invests in.
    • Rupee cost averaging: When it comes to rupee cost averaging, mutual fund SIPs outperform FDs as unlike mutual funds, FDs are not laced with this benefit. Courtesy this benefit, SIPs eradicates the need for timing the market. As the amount invested in the mutual funds is already fixed is deposited timely, the shares bought adjusts by itself depending on the market condition that prevails.
    • Compounding power: This is another front where mutual fund SIPs score over term deposits. Though it holds true only when the investment are made for the long term, the money invested in mutual fund SIPs tend to grow aggressively. So, if one is looking for good returns from mutual funds, it is better to invest money for a long tenure as there is a good chance of great returns thanks to the power of compounding.

    Hence, as seen in the differences there are certain fronts where both Mutual funds or Fixed Deposits score over each other.

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    Differences between Mutual Fund SIP and Fixed Deposits Reviews

    • Axis Bank Fixed Deposit
      "Very Assured Fixed deposit"
      0.5 5.0/5 "Blown Away!"
      I opened a Fixed deposit in Axis bank for one year of term period . They sent a physical copy for my fixed deposit which gives a good assurance about that bank . So that my nominee can be aware of my FD and can approach them very easily if something happens to me . I can check the status of my FD through on line itself .
      Was this review helpful? 0
      , hyderabad
      Reviewed on Apr 23, 2019
    • HDFC Bank Fixed Deposit
      "Excellent services"
      0.5 4.5/5 "Excellent!"
      The best bank for a fixed deposit is HDFC Bank. The customer support is good and they are responsive as well. They offer an interest like other bank on my savings. The best is there is no lock in period so I close this account when ever I want too and I can do it with just a click away online. Where as other banks they would ask me to go to the home branch.
      Was this review helpful? 2
      , new delhi
      Reviewed on Apr 16, 2019
    • review Fixed Deposit
      "Good interest on savings"
      0.5 5.0/5 "Blown Away!"
      I also have a fixed deposit with Saraswat Cooperative Bank. The customer support is good and they are responsive. I been a customer for 20 years. The interest they provide on my savings is more than satisfactory and there are no charges taken for this account features.
      Was this review helpful? 1
      , mumbai
      Reviewed on Apr 15, 2019
    • SBI Fixed Deposit
      "Less interest rate"
      0.5 5.0/5 "Blown Away!"
      Two months before I deposited my money nearly 1,50,000 in SBI . I am really happy with their customer service and response . But the interest rate is around 6.85 % which is lesser comparing to other bank . Since It is Government bank, I need not to worry in future if anything uncertain happens .
      Was this review helpful? 1
      , chennai
      Reviewed on Apr 15, 2019
    • Central Bank of India Fixed Deposit
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have done fixed deposit on CENTRAL BANK OF INDIA an year ago, i did not face any issue in creating account. They have given me limited tenure period, i use to pay my payment through my credit card of same bank, now i have withdrawn my deposit. I got good interest rate so far my experience was good.
      Was this review helpful? 1
      , hyderabad
      Reviewed on Apr 15, 2019
    • Citibank Fixed Deposit
      "Satisfactory"
      0.5 5.0/5 "Blown Away!"
      I also have a fixed deposit with Citibank. I could get the clear details online. Though I would not be able to open this account through the mobile application. I can do it through the desktop. It has been a good experience till date and beneficial too.
      Was this review helpful? 0
      , mumbai
      Reviewed on Apr 15, 2019
    • SBI Fixed Deposit
      "Good in all"
      0.5 5.0/5 "Blown Away!"
      I also have a fixed deposit account with State Bank of India. The customer services are good. The process can be done online. The lock in period depends on the choice of the customer. The minimum tenure is six months. The interest rate provided is also equally good.
      Was this review helpful? 4
      , new delhi
      Reviewed on Apr 13, 2019
    • Bank of Baroda Fixed Deposit
      "Overall no hassles"
      0.5 5.0/5 "Blown Away!"
      It is a very simple process to open a fixed deposit account with Bank of Baroda. The lock in period is for five years. They provide a very good interest on my savings. The process at the bank is also good. There are no hassles in the overall experience.
      Was this review helpful? 0
      , faridabad
      Reviewed on Apr 12, 2019
    • SBI Fixed Deposit
      "Looking for More Investment"
      0.5 5.0/5 "Blown Away!"
      Five years before , I opened a Fixed deposit in SBI , It automatically renewed on every year. I just monitors in online . I am looking for more investment in the future. At one stage I open this fixed deposit for my children's education or marriage .
      Was this review helpful? 1
      , secunderabad
      Reviewed on Apr 10, 2019
    • Federal Bank Fixed Deposit
      "Good customer support"
      0.5 5.0/5 "Blown Away!"
      In Federal bank , for Recurring deposit they provide very good interest rate of almost 7.5% .Even it is applicable for shorter period and longer term also . Very good customer support . After comparing with other banks , I decided to start my FD in Federal bank .
      Was this review helpful? 1
      , kochi
      Reviewed on Apr 09, 2019
    • review Fixed Deposit
      "Overall good"
      0.5 5.0/5 "Blown Away!"
      I hold a fixed deposit account with City Union Bank. The rate of interest is of 7.25% on my savings. The customer support is good and they are responsive as well. It was easy to open this account and I can do it online. There are no hassles in the overall service.
      Was this review helpful? 0
      , chennai
      Reviewed on Apr 05, 2019
    • ICICI Bank Fixed Deposit
      "Good Accesibility"
      0.5 5.0/5 "Blown Away!"
      My fixed deposit with ICICI, I have opened the account through online just from the I mobile. I invested around Rs. 1 lakh its for long duration. The interest is good, I can withdraw the money through online banking without any charges. I am very fine with them.
      Was this review helpful? 4
      , indore
      Reviewed on Apr 03, 2019
    • IndusInd Bank Fixed Deposit
      "Good interst for FD savings"
      0.5 4.0/5 "Great!"
      I opened fixed deposit account through online, the process was simple without any documentation. Currently the bank is providing the interest around 8% for the FD account. I done it before year it has tenure this year one year. I think this august my Fd amount gets matured.
      Was this review helpful? 4
      , bangalore
      Reviewed on Apr 03, 2019
    • Standard Chartered Bank Fixed Deposit
      "Good service"
      0.5 4.5/5 "Excellent!"
      Hold a fixed deposit Account with STANDARD CHRATED BANK . The best thing is their Customer Service .The response of banking service and banking staff is good here . The online banking is good and the services at the branch is also satisfactory.So far it has been good experience with STANDARD bank .
      Was this review helpful? 1
      , new delhi
      Reviewed on Apr 03, 2019
    • HDFC Bank Fixed Deposit
      "Its Good"
      0.5 4.0/5 "Great!"
      I went to the bank for the FD process, the service was good they helped to open the account on the same day. I took the fixed deposit for the period of three years and I deposited Rs. 1 lakh, I would get the amount of Rs. 1.35 lakh. I do have HDFC online access .
      Was this review helpful? 3
      , hyderabad
      Reviewed on Apr 03, 2019
    • Post Office Fixed Deposit
      "Good Experience"
      0.5 4.0/5 "Great!"
      My fixed deposit got matured with Post office, the interest was nominal. The staff are good they gave me good service. There was no online option hence I need to visit for depositing the cash. I invested for five years for fixed deposit, my experience was good.
      Was this review helpful? 1
      , chennai
      Reviewed on Apr 03, 2019
    • HDFC Bank Fixed Deposit
      "Good overall"
      0.5 5.0/5 "Blown Away!"
      I have a fixed deposit account with HDFC Bank and the banking process is good. I could open this account online and the account has been beneficial too. I earn a good interest. I can also close this account without having to go in person to the bank. It can be done online too.
      Was this review helpful? 3
      , bangalore
      Reviewed on Mar 29, 2019
    • IndusInd Bank Fixed Deposit
      "Good Investment with Indusind bank"
      0.5 5.0/5 "Blown Away!"
      One time investment I have done in Indusind bank as a fixed deposit, it has locking period around one year. They are providing the interest around 8% for one year. Online option is easy to activate the service and closing, there is no charges for the FD maintenance.
      Was this review helpful? 2
      , indore
      Reviewed on Mar 26, 2019
    • Axis Bank Fixed Deposit
      "Convenient"
      0.5 4.5/5 "Excellent!"
      I have a Fixed Deposit with Axis Bank because they have offered more interest than ICICI BANK and its been more than 1.5 years. Their customer service is always good. The interest rate is around 7.6% which am not sure. I can manage the account online. I opted for 18 months.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Mar 26, 2019
    • Bank of Baroda Fixed Deposit
      "Need improvement on customer support"
      0.5 4.0/5 "Great!"
      I have done one time investment fixed investment in Bank of Baroda, it has five year of locking period. The interest is nominal for the FD, I believe BOB give the interest around 8% , however there was no proper information regarding the interest. My father have taken this FD on my name, every year I deposit the amount.
      Was this review helpful? 1
      , noida
      Reviewed on Mar 25, 2019
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