The investment market in India encompasses a wide range of choices. From beginners to seasoned investors, everyone can find financial products that meet their needs. Two such options that often confuse Indian investors are fixed deposits and systematic investment plans. Read on to get a better idea about their differences to make an informed decision.
What is a fixed deposit (FD)?
FDs are products that allow you to put a lump sum in the account for a tenure of your choice. They are a safe investment option as FD interest rates are not affected by the financial market. You may choose from cumulative and non-cumulative deposits and earn assured returns.
What is a systematic investment plan (SIP)?
SIPs are mutual funds where you can regularly put in a small amount of money each month. The fund managers then invest your capital in debt and equity-based products to generate substantial returns. SIP is suitable for new investors as it helps build good investment habits.
Benefits of FD
- Guaranteed returns on investment
- Risk-free option
- Flexible investment tenure
- You may avail of loans against your Fixed Deposit investments
- Can be used as security when taking a credit card or loan
- Allows overdraft withdrawal and