FD Vs Stock Investing – Which Is Better?

Rohan Mathew

Updated on:

FD vs Stock Investing Which is Better

There are always options when it comes to earning interest on your returns. But looking for the perfect option; then you have got to know all the possibilities for success and all of the possibilities for failure. You know your money will grow on both options, the stock market or a fixed deposit. Here are some of the latest statistics on FD rates and mutual fund returns.

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Fixed Deposit Interest Rates

  • ICICI Bank FD Interest Rate – 2.50% to 6.30%
  • Bank of India Interest Rate – 2.85% to 5.55%
  • Punjab and Sind Bank FD Rate – 3.00% to 5.80%
  • IDFC Bank FD Rates – 2.50% to 5.75%
  • Axis Bank FD – 2.50% to 6.50%
  • Canara Bank FD – 2.90% to 5.75%

Mutual Funds – Equity Related Return Rates

  • Quant Tax Plan – Direct – Growth – 15.17%
  • Motilal Oswal Long Term Equity Fund – Direct – Growth – 14.30%
  • HDFC LT Advantage – Direct – Growth – 13.77%
  • L&T Tax Adv – Direct – Growth – 13.28%
  • IDFC Tax Advantage (ELSS) Direct – Growth – 13.27%
  • Aditya Birla Sun Life Tax Relief 96 – Direct – Growth – 13.28%

What is the Better Scheme For You?

In order for you to understand more about the scheme, you need to compare them both and see how the two of them are different. So here we will discuss how the two of them are different and what choice is best for you in order to be financially successful and have your money growing in the right way.


– Mutual fund returns are related to the market in which they invest and are entirely dependent on stock market success.

– Fixed deposits provide fixed and guaranteed returns at a predetermined rate of return over a predetermined time period.


– The risk in a mutual fund varies depending on the fund, but it is primarily influenced by the market.

– FDs are risk-free since the depositor receives guaranteed returns at a predetermined interest rate.

Associated Expenses:

– Mutual funds have charges and fees that are deducted as part of the fund’s management.

– FDs do not incur any fees during the beginning of the term of the deposit.

Shifting from Conventional FDs to Mutual

There was a time when any excess money — bonus or increase – was invested in bank FDs. Our grandparents and parents have all invested in FDs at some point during their lives. It was the finest way to make money while protecting your capital.

Mutual funds have risen to prominence in recent years. As a result, fixed-income investments (FDs) have lost their luster as the most popular long-term investment goal. During the 2016 demonetization, mutual funds were able to capitalize on the opportunity created by lower deposit return rates. 

Mutual funds also gained popularity as a result of the availability of tax-advantaged mutual funds. When debt funds began to provide higher yields with greater liquidity, many low-risk investors decided to abandon ship.

What are the Closes to a Traditional FD?

In terms of risk, debt funds are the closest thing to traditional FDs. The basic purpose of a debt fund is to provide investors with consistent income over the course of their investment. As a result, you must select a time horizon that corresponds to the funds. 

You can learn about different debt funds and their term directly from the fund houses, online, or through a third party. It will assist investors in understanding a fund’s performance in terms of interest rates. It will also make it easier for you to profit from market volatility by making well-informed selections.

Banks determine a fixed interest rate for fixed deposits based on the tenure selected. For example, the Bank of India Interest Rate for FD ranges from 2.85% – 5.55%. Debt fund returns are heavily influenced by the overall movement of interest rates. They may provide reasonable returns (compared to fixed deposits) in the form of capital appreciation and monthly income. 

One advantage of fixed deposits is that market highs and lows have no effect on the returns you earn. During times of low-interest rates in the economy, debt funds often outperform fixed deposits by a significant margin.

Fixed deposits are a general and conservative way of investing. It is a good option, no doubt. It is safe and secure, with guaranteed returns. But in an inflation-oriented environment with prices going up every day, people need more returns, and the stock market is a great way for that. Moreover, it is a good thing to begin taking a little risk, but it initiates growth.

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Inflation on Both Options

Everyone understands that inflation reduces savings by causing currency value to depreciate. Debt mutual funds, despite their inherent risk, have the potential to keep up with inflation. For example, if you invested in a fixed-rate deposit at 6% interest and the inflation rate is 5%, your adjusted return would be 1%. Debt funds may provide higher returns than equity funds.


Both FD and equity have advantages and disadvantages. It is up to you to decide what is best for you. If you want a stable, risk-free, and hands-off investment, FDs are a good option. However, if you want to expand your money exponentially and are willing to take a risk, equities may be the greatest bet for you.