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Fixed Deposit Vs Stocks

Fixed Deposit Vs Stocks

Fixed deposits and stocks are two of the many different kinds of investments available to us today. Depending on what your risk appetite is and how much you're willing to invest, you can choose the right option.

If you're a newbie in the area of investing, the options can seem puzzling. If mutual funds, market shares, fixed deposits and recurring deposits seem similar, why not take a look at the differences between the various investment options. After all, you must understand all your options thoroughly before making a choice.

A Basic Overview of Fixed Deposits:
FD (Fixed Deposits) are of two types, cumulative and non-cumulative. A cumulate FD compounds interest annually, whereas the non-cumulative FD pays out interest at regular intervals. These intervals can be monthly, quarterly, semi-annually and annually. In both cases, your money is locked in for a fixed tenor.

Here are The Advantages of Fixed Deposits:
They are Low Risk: Fixed deposits are risk-free investments as they aren't dependent on market fluctuations. So, they help your money grow at a steady pace. Moreover, they offer a good rate of interest that usually ranges between 7%–8% and is pre-determined. While you don’t have the opportunity of making windfall gains, your money is safe and you get a fixed sum at the end of the tenor. This type of investment is greatly favoured by the Indian masses due to its stability.

Fixed Tenor: FDs have a fixed tenor so your money is safely invested for a period of time. You have the option of choosing between 12–60 months. But, it offers the option of premature withdrawal. If you need money, you can easily break your FD or take a loan against FD. Do note that if your interest exceeds Rs. 10,000, it is subject to tax. Also, if you make a premature withdrawal, you stand to lose a portion of the interest.

A Basic Overview of Investing in Stocks:
Investing in stocks is entirely dependent on how the market is doing. Even if you have in-depth market knowledge and are a seasoned risk-taker, it doesn't guarantee returns. You may make windfall gains, but this can't be predicted from the get-go. So, if you're a beginner, it is wise to invest only a small amount of money to test the waters. Additionally, it must be noted that this investment tool is better suited to individuals with a high risk appetite. Your risk appetite is defined by how well you can absorb a financial loss. If you have a low risk appetite, keeping in mind your financial condition, it is better to steer clear of the stock market, at least for the time being.

Even if you choose to invest in stocks, it is wise to invest a portion of your savings in a fixed deposit. It puts the safety of your investment first, and guarantees returns. Moreover, not only is it low-risk, it is also low-involvement. Once you open an FD, you don't have to constantly monitor it.

Bajaj Finance offers excellent fixed deposits that you can consider. They check all the boxes when it comes to safety with high stability ratings, and come with a flexible tenor of 12–60 months. You can invest as little as Rs.25,000 and enjoy FD interest rates of up to 7.85% or even 8.20% if you are a senior citizen. To calculate your FD returns, take a look at this handy FD Calculator. Apart from this, it offers several add-on benefits such as online access to your investment and easy application.


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