Published Jun 6, 2026 4 Min Read

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Introduction

A savings account helps you keep money safely for daily use and emergencies. Mutual funds aim to grow your money over time through market-linked investments, but returns are not guaranteed.

  • Savings accounts usually offer fixed interest rates decided by banks, while mutual fund returns depend on market performance.
  • SIP investments start from Rs. 100 per month on the Bajaj Broking website.
  • Investors can choose from 4,000+ mutual fund schemes across equity, debt, hybrid, ELSS, and thematic categories.
  • Savings accounts offer high liquidity because you can withdraw money anytime through ATMs, UPI, or online banking.
  • Mutual fund schemes carry SEBI-mandated riskometer labels: Low, Low to Moderate, Moderate, Moderately High, High, or Very High.
  • ELSS funds qualify for a deduction of up to Rs. 1.5 lakh under Section 80C and carry a mandatory 3-year lock-in period.

You can start your mutual fund investment journey on the Bajaj Broking website by completing SEBI-mandated KYC, exploring 4,000+ schemes, and beginning an SIP from Rs. 100 per month.

What are mutual funds?

Mutual funds pool money from many investors and invest it in assets like stocks, bonds, gold, or money market instruments. Professional fund managers at the respective AMC manage the scheme according to its investment objective.

When you invest in a mutual fund, you receive units based on the scheme’s NAV or Net Asset Value. NAV is calculated daily after market close using the fund’s assets and liabilities.

Mutual fund returns are market-linked and not guaranteed. SEBI requires every mutual fund scheme to display a colour-coded riskometer showing risk levels from Low to Very High.

Types of mutual funds

Fund typeWhat it invests inRisk levelIdeal investor
Equity fundsCompany sharesModerate to Very HighLong-term wealth creation
Debt fundsBonds and money market instrumentsLow to ModerateStable income and lower risk
Hybrid fundsEquity and debt mixModerateBalanced growth and stability
ELSS fundsEquity shares with tax benefitHighTax-saving and long-term investing

The Bajaj Broking website offers 4,000+ mutual fund schemes across equity, debt, hybrid, ELSS, thematic, and NFO categories.

What is a savings account?

A savings account is a bank account that helps you store money safely while earning interest. You can deposit or withdraw money anytime using ATM cards, online banking, cheques, or UPI.

Savings accounts are designed for short-term financial needs and emergency funds. Banks decide the interest rate, and returns are usually lower than long-term market-linked investments.

Your money in a savings account is not directly affected by stock market movements. This makes savings accounts suitable for people who want safety and easy access to funds.

Savings account vs mutual fund: What is the difference?

Savings accounts and mutual funds serve different financial purposes. A savings account focuses on safety and liquidity, while mutual funds focus on long-term wealth creation.

FeatureSavings accountMutual fund
PurposeSafe storage of moneyWealth creation and investment growth
ReturnsFixed bank interestMarket-linked returns
RiskVery lowDepends on fund category
LiquidityInstant accessDepends on scheme type
Investment amountVaries by bankSIP investments start from Rs. 100 per month
Tax benefitsLimitedELSS offers Section 80C deduction up to Rs. 1.5 lakh

Mutual fund schemes are regulated by SEBI, while AMFI supports ethical practices across the mutual fund industry. KYC is mandatory before investing in mutual funds.

Which gives better returns?

Savings accounts provide fixed interest decided by banks. Mutual funds aim to generate higher long-term returns because they invest in market-linked assets such as equities and bonds.

Equity mutual funds may deliver higher growth over long periods, but returns can fluctuate due to market conditions. Debt mutual funds usually carry lower risk and lower return potential compared to equity funds.

Return comparison overview

Investment optionReturn typeReturn potentialSuitable duration
Savings accountFixed interestLowShort term
Equity mutual fundMarket-linkedModerate to HighLong term
Debt mutual fundMarket-linkedLow to ModerateShort to medium term
Hybrid mutual fundMarket-linkedModerateMedium to long term

How risky are mutual funds compared to savings accounts?

Savings accounts carry very low risk because banks provide fixed interest and easy liquidity. Mutual funds carry varying risk levels depending on the type of assets held in the scheme.

SEBI requires every mutual fund scheme to display a colour-coded riskometer. Risk levels range from Low to Low to Moderate, Moderate, Moderately High, High, and Very High.

Risk comparison

Investment optionRisk levelRisk source
Savings accountVery lowMinimal market exposure
Debt mutual fundLow to ModerateInterest rate and credit risk
Hybrid mutual fundModerateEquity and debt market changes
Equity mutual fundHigh to Very HighStock market fluctuations

Mutual fund returns are not guaranteed. Past performance does not guarantee future returns.

Which option should you choose?

You should choose a savings account if your priority is safety, emergency access, or short-term financial needs. Savings accounts are useful for paying bills, handling emergencies, and keeping daily expenses separate.

You may choose mutual funds if you want long-term growth and are comfortable with market-linked risk. SIP investments help you invest regularly instead of investing a large amount at once.

You may prefer a savings account if:

  • You need quick access to money anytime.
  • You want stable and predictable returns.
  • You are saving for short-term goals.
  • You do not want market-linked fluctuations.

You may prefer mutual funds if:

  • You want long-term wealth creation.
  • You can stay invested for several years.
  • You are comfortable with some level of market risk.
  • You want access to equity, debt, hybrid, ELSS, and thematic funds.

The Bajaj Broking website allows you to invest through SIP or lumpsum modes after completing mandatory KYC verification.

Conclusion

The mutual fund vs savings account choice depends on your financial goals, investment horizon, and comfort with risk. Savings accounts offer safety and liquidity, while mutual funds provide market-linked growth opportunities over the long term.

Many investors use both options together. You can keep emergency money in a savings account and use mutual funds for long-term goals like retirement, education, or wealth creation.

Frequently asked questions

Is a savings account better than a mutual fund?

A savings account may be better for short-term needs, emergency funds, and easy access to money. Mutual funds are more suitable for long-term wealth creation because they invest in market-linked assets. On the Bajaj Broking website, you can explore 4,000+ mutual fund schemes across equity, debt, hybrid, and ELSS categories. SIP investments can start from Rs. 100 per month after completing SEBI-mandated KYC.

What is the average savings account interest rate in India?

Savings account interest rates in India usually range between 2% and 7% per year, depending on the bank and account type. These rates are fixed by banks and may change over time. Savings accounts provide stable returns and high liquidity, but they generally offer lower long-term growth potential compared to market-linked investments such as mutual funds.

Are mutual funds risky compared to savings accounts?

Yes, mutual funds are generally riskier than savings accounts because their returns depend on market performance. SEBI requires all mutual fund schemes to display a riskometer with levels ranging from Low to Very High. Debt funds usually carry lower risk than equity funds. The Bajaj Broking website allows you to compare different fund categories and investment modes such as SIP and lumpsum before investing.

Is mutual fund better than savings account?

A mutual fund may be better if your goal is long-term growth and you can handle market fluctuations. A savings account may be better for short-term savings and emergency access. Mutual funds offer different categories such as equity, debt, hybrid, ELSS, and thematic funds. You can begin investing through SIPs from Rs. 100 per month after completing KYC requirements under SEBI regulations

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Disclaimer

Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed.

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.

Disclaimer

Bajaj Finance Limited ("BFL") is registered with the Association of Mutual Funds in India ("AMFI") as a distributor of third party Mutual Funds (shortly referred as 'Mutual Funds) with ARN No. 90319

BFL does NOT:

(i) provide investment advisory services in any manner or form.

(ii) carry customized/personalized suitability assessment.

(iii) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.

In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on As-is basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme/Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities forming part of the Mutual Fund. The NAV will inter-alia be exposed to Price/Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other/better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.

Investment by a person residing outside the territorial jurisdiction of India is not acceptable nor permitted.

Disclaimer on Risk-O-Meter:

Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc, and shall also consult their Professional advisors, if they are unsure about the suitability of the scheme before investing.


Disclosure: Bajaj Finance Limited (BFL) is a distributor of Mutual Funds with ARN - 90319 and distributes mutual funds of Bajaj Finserv Asset Management Limited (BFSAMC). BFL receives commission towards distribution of mutual fund products. BFSAMC is a group company of BFL, carrying business on arm’s length basis without any conflict of interest and in accordance with the prevailing law / regulation.

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