FD vs Mutual Funds: Which Is the Better Investment Option?

FDs offer safe, guaranteed returns for conservative or short-term investors, while mutual funds provide market-linked growth for long-term goals
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FD vs MF
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4 mins
28-November-2025

Every investor faces the age-old question: FD or Mutual Fund? Both have their place in a financial plan, but the right choice depends on your risk appetite, goals, and timeline. Fixed Deposits bring peace of mind with guaranteed returns, while Mutual Funds provide diversification and the chance for higher growth—though with added volatility.

If stability is your priority, Bajaj Finance Fixed Deposits give you assured returns up to 7.30% p.a. for senior citizens and 6.95% p.a. for general investors—among the highest in the industry. Open FD account.

What is a fixed deposit?

A Fixed Deposit is one of the most secure ways to grow your money. You deposit a lump sum for a chosen tenure and earn a fixed interest rate throughout. Since FD returns are not linked to the market, your money grows steadily and risk-free.

What are mutual funds?

Mutual Funds pool money from multiple investors to create a diversified portfolio of stocks, bonds, or other assets. These funds are managed by professionals, but returns fluctuate with market conditions. While they can deliver higher gains over the long term, they also carry higher risks compared to FDs.

Fixed Deposit

  1. Trusted by over 5 lakh customers
  2. Fixed Deposits worth more than Rs. 50,000 crore booked
  3. Rated CRISIL AAA/STABLE and [ICRA]AAA(STABLE)
  4. Up to 0.35% p.a. extra interest offered for senior citizens
  5. Flexible interest payout options available - Monthly, Quarterly, Half-yearly, Annually or at Maturity

By proceeding, you agree to our Terms and Conditions

Benefits of investing in fixed deposits and mutual funds

Both options come with unique advantages:

  • Mutual Funds: Higher potential returns, liquidity, and diversification across assets.
  • Fixed Deposits: Stability, assured returns, and complete immunity from market risks.

While mutual funds are subject to market swings, Bajaj Finance FDs offer AAA/STABLE ratings by CRISIL and ICRA, ensuring your investment is one of the safest in the country. Open FD.

Difference between fixed deposit and mutual funds

  • FDs: Guaranteed returns, pre-decided interest rate, unaffected by volatility.
  • Mutual Funds: Market-dependent, returns are variable and come with risk.

This means FDs are better suited for conservative investors, while mutual funds appeal to those with higher risk tolerance.

Debt Mutual Funds vs Fixed Deposits

Here is a comparison between debt mutual funds which are considered safer options as compared to hybrid or equity funds and FDs:

Particulars

Debt Funds

Fixed Deposits

Rate of Returns

7% – 9%

3% – 10%

Dividend Option

Yes

No

Risk

Low to Moderate

Very Low

Liquidity

High

Moderate

Investment Mode

SIP or Lumpsum

Lumpsum

Early Withdrawal

With exit load

Yes (with conditions)

Expenses

Expense ratio

None


Want to avoid hidden costs? Unlike mutual funds that charge expense ratios, Bajaj Finance FDs come with zero additional charges—you get what you’re promised. Check eligibility and invest in FDs now!

FDs vs Mutual Funds: Which is better?

It all depends on your goals and risk tolerance.

  • If you want safety, guaranteed growth, and no surprises, choose Fixed Deposits.
  • If you’re ready to take risks for potentially higher long-term gains, mutual funds may suit you.
  • Many investors balance both—FDs for stability and liquidity, and mutual funds for wealth creation.

Fixed deposit variants

Highest Credit Ratings | Trusted with over 1.4 million Deposits | Assured Returns on FD
Recommended

Fixed Deposit - 60 Months

INTEREST RATES UP TO
7.30% p.a.
Invest Online

Fixed Deposit - Senior Citizen

INTEREST RATES UP TO
7.30% p.a.
Invest Online

Fixed Deposit - Age below 60

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - Minor

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - HUF

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - Sole Proprietor

INTEREST RATES UP TO
6.95% p.a.
Open FD

Who can invest in fixed deposits and mutual funds?

  • Risk-Averse Investors: FDs suit those seeking guaranteed, stable returns with minimal risk, while mutual funds—especially equity funds—carry market volatility.
  • For Regular Income: FDs are ideal for predictable interest payouts. Mutual fund returns fluctuate and are not suitable for fixed monthly income.
  • Short-Term Goals: FDs work well for short-term targets due to capital safety. Equity-based mutual funds are riskier and need time to grow.
  • Tax Efficiency: Mutual funds generally offer better tax benefits through long-term capital gains, whereas FD interest is fully taxable.
  • Long-Term Wealth Creation: Equity mutual funds are better for long-term growth, while FDs often struggle to beat inflation over time.
  • Need Quick Liquidity: Open-ended mutual funds provide easier access to money; FDs charge penalties for premature withdrawals.

Conclusion

Both FDs and mutual funds have their place in your financial plan. But if you want an investment that guarantees growth, keeps your money safe, and offers complete flexibility, Bajaj Finance Fixed Deposits are a smarter choice. With high safety ratings, competitive returns, and easy online booking, you can invest confidently and watch your savings grow. Open FD.

Frequently asked questions

What is the minimum amount needed to start a Bajaj Finance FD?

You can start your investment journey with just Rs. 15,000, making it accessible and easy to build disciplined savings.

Is it possible to withdraw the FD amount before maturity?

Yes, you can withdraw the FD amount before maturity. However, most financial institutions charge a penalty for early withdrawal.

Can I open my FD online?

Bajaj Finance Fixed Deposit offers each customer a chance to open their FD without any hassle online through their website. You can register on the website, complete the KYC, and start your Fixed Deposit in just a few minutes.

Is FD better than sip?

In a fixed deposit, you invest a lump sum amount at once. However, with SIP, you make small monthly investments. However, SIP is a risky investment, while a fixed deposit offers profitable returns without any risk.

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.