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Gold ETF or a fixed deposit how to make the smarter choice

  • Highlights

  • Secure options for risk-averse investors

  • Gold ETFS for investors with a healthy risk appetite

Gold ETFs and fixed deposits are popular investment options that suit investors with varying requirements. Investing in a gold ETF means purchasing gold in an electronic format. Fixed deposits, on the other hand, involve depositing a sum of money in an account and gaining rates of interest over that amount.
If you are an investor with a healthy risk appetite, you could be comfortable investing in a gold ETF, as these investments are under the influence of fluctuating market forces of supply and demand. If, however, you are risk-averse investor seeking a safe form of investment, fixed deposits could be a better option for you.
Before investing in either of these options it is important to analyse their benefits and features.

Attributes and advantages of investments in gold

1) Involves investing money in the electronic form of gold. This means purchasing a certain quantity of gold online and reselling it according to your preference.
2) It is a highly flexible option. You have full freedom to choose the amount of money you wish to invest and even freedom to choose the tenor.
3) It has an advantage over inflation as gold prices are constantly increasing.

4) May be slightly risky as prices for gold are under the direct control of volatile market forces like supply and demand. However, gold ETFs are less risky when compared to trading actual gold.
5) The rising demand for gold worldwide can counter the point made above and provide some safety to the investment.
6) May or may not provide periodical returns. This would be entirely up to you, when you choose to sell.
7) Requires investor to have immense instinct and experience of the market makers and the market forces.
8) Returns from these dealings may be heavily taxed, depending on your profits, income and returns.

Attributes and advantages of fixed deposits
1)This option involves investing a sum of money in an account to gain interest over a tenor.
It is a highly flexible option. You have full freedom to choose the amount of money you wish to invest and even freedom to choose the tenor.
2) An FD may or may not be flexible, depending on your lender.
In this option you have the choice as to whether you want periodical returns, or cumulative returns at the end of the tenor. You can also opt for a functional FD calculator by Bajaj Finance that helps you compute your interest gains.
3) This option has many sub categories that you can review and choose from. The various categories of FDs are recurring FDs, cumulative FDs, non-cumulative FDs and non-recurring FDs.
4) Investors who seek to gain tax free returns can always explore the option of tax-saving FDs.
5) A fixed deposit is usually liquid and can be prematurely withdrawn. However, much would depend on the terms and conditions of institution where you have opened a fixed deposit account.
6) This option is extremely low risk. It is doesn’t have any influence of market forces.
7) This option provides you steady income over a period of time.
8) Bajaj Finance enables you to choose your own tenor and enjoy higher interest rates, especially if you’re a senior citizen or an existing customer.

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Additional Read: How to pick the right NBFC for a Fixed Deposit

Once you have viewed these features you can make a decision based on your requirements. If you are convinced about fixed deposits, then wait no more and apply for a fixed deposit scheme, and get attractive interest rates along with online account access.

DISCLAIMER: The mentioned fixed deposit interest rates are indicative only, and may be subject to change periodically. Please check the interest rates on our website.

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