{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.indusind.com\/iblogs\/fixed-deposit\/fixed-deposit-vs-other-investments\/#BlogPosting","mainEntityOfPage":"https:\/\/www.indusind.com\/iblogs\/fixed-deposit\/fixed-deposit-vs-other-investments\/","headline":"Fixed Deposit vs Other Investments","name":"Fixed Deposit vs Other Investments","description":"When it comes to choosing where to park your money, the Indian financial market offers countless options. While riskier investments can offer higher returns, many investors prefer the guaranteed safety that Fixed Deposits (FDs) provide. FDs have long been favoured by investors who prefer low-risk options and predictable earnings on their savings. However, with so...","datePublished":"2025-01-27","dateModified":"2025-01-27","author":{"@type":"Person","@id":"https:\/\/www.indusind.com\/iblogs\/author\/indusind_bank_pfx_team_indperformics-com\/#Person","name":"CONVONIX Antony","url":"https:\/\/www.indusind.com\/iblogs\/author\/indusind_bank_pfx_team_indperformics-com\/","image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/7d15b864167d3868c12ffdda340cc1c9?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/7d15b864167d3868c12ffdda340cc1c9?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"IndusInd","logo":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","width":201,"height":86}},"image":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/Fixed-Deposit-vs-Other-Investments-banner-19-min.png","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/Fixed-Deposit-vs-Other-Investments-banner-19-min.png","height":288,"width":764},"url":"https:\/\/www.indusind.com\/iblogs\/fixed-deposit\/fixed-deposit-vs-other-investments\/","about":["Fixed Deposit"],"wordCount":1298,"articleBody":"When it comes to choosing where to park your money, the Indian financial market offers countless options. While riskier investments can offer higher returns, many investors prefer the guaranteed safety that Fixed Deposits (FDs) provide.FDs have long been favoured by investors who prefer low-risk options and predictable earnings on their savings. However, with so many other options available today, it\u2019s critical to understand how FDs compare to alternatives like mutual funds, stocks, and real estate. Get all the insights below!Understanding FDsAn FD is a financial instrument offered by banks where you deposit a lump sum of money for a fixed tenure. In return, the bank offers an interest rate that is fixed for the duration of the deposit. Upon maturity, you get the principal amount along with the earned interest. You can open a fixed deposit account quickly and conveniently. For example, IndusInd Bank Fixed Deposits, with a 100% digital process, allow you to open an FD from any location and enjoy a competitive rate, flexible tenures (from 7 days to 10 years), multiple payout options, and more.Here are the steps to get started:StepsProcessStep 1Verify your PAN card and Aadhaar card detailsStep 2Provide your personal information and FD preferences (amount, tenure, etc.)Step 3Complete a simple video KYC verificationStep 4Fund the FD and start earning interestAlso Read: Tips for Maximising Returns on Fixed DepositsFixed Deposits vs. Other Investment Options1. Risk Appetite: Safety vs. VolatilitySafety is where FDs clearly outperform many other options. Your investment is not subject to market fluctuations, and at the end of the tenure, you will receive both the invested amount and the interest accrued over time. This benefit makes FDs a risk-free investment avenue, especially for conservative investors or those nearing retirement.Options like stocks and mutual funds come with a degree of risk. In stocks, the performance of your investment is tied to market volatility and company performance. Even though they have the potential for high returns, they can also result in losses if not selected very carefully. In simple words, there is no guarantee of fixed returns, plus you incur risks like market fluctuations, regulatory issues, and liquidity constraints.If you prioritise capital preservation, FDs provide a level of security that market-linked options can\u2019t match.2. Returns: Stability vs. Growth PotentialFixed deposits offer guaranteed returns, typically in the range of 7% to 7.5% annually, depending on the bank and tenure. Senior citizens enjoy an additional 0.5% to 0.75% interest rate on deposits. Once you book an FD, your interest rate stays fixed, regardless of market fluctuations. For example, if you invest \u20b95 lakh in an FD for two years at a 7.75% interest rate, an online FD calculator will show that you will earn \u20b982,964. This stability and predictability make FDs a reliable choice for those who want zero-risk returns.  Stocks or equity mutual funds can potentially offer more returns. You can anticipate equity markets to generate returns of 10-12% annually over the long term. But this growth comes with the risk of volatility. Real estate, too, can deliver high returns, especially in booming markets, but it requires a significant initial investment, and the returns depend on factors such as location, infrastructure development, and market trends. 3. Safety of CapitalFDs are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), which offers protection of up to \u20b95 lakh per depositor per bank (principal + interest). This means your capital up to \u20b95 lakh is 100% safe even if the bank faces financial troubles, which is rare.Other investment options like stocks, mutual funds, or real estate do not offer any such insurance protection. The value of these investments can fluctuate with market conditions, and there\u2019s no guarantee of capital protection. 4. Tax BenefitsTax-saver FDs (with a five-year lock-in period) offer deductions of up to \u20b91.5 lakh under Section 80C of the Income Tax Act, 1961. However, the interest earned on FDs is taxed as per your income slab, and Tax Deducted at Source (TDS) is applicable only if the interest exceeds \u20b940,000 (\u20b950,000 for senior citizens) in a financial year. Mutual fund investments like Equity-Linked Savings Schemes (ELSS) also offer tax benefits under Section 80C, but these are subject to high market risks.Key TakeawaysFDs differ from other investments primarily in terms of risk, returns, and liquidity. They offer capital safety and guaranteed returns with zero risk, whereas investments like stocks and mutual funds can provide higher returns but come with market volatility risk and require a long-term commitment. Moreover, FDs are backed by DICGC insurance up to \u20b95 lakh, which further enhances their appeal for risk-averse individuals. If you prioritise high security, stability, and growth, choose the IndusInd Bank Fixed Deposit, which offers best-in-class FD interest rates. Moreover, you benefit from hassle-free online booking, multiple interest payout options, flexible tenures, premium digital banking solutions, and tax-saver FDs.Book today!Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct\/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.\u202fShare This:"}