Why FD is a better investment than gold

Know all the details about why investing in an FD is a better investment option than in gold.
3 mins
12 Oct 2022

Indians have always preferred investing in Fixed Deposits, Gold, and Real estate. Various studies suggest that these three investment classes combined have a major chunk of investors as compared to equities, cryptocurrency, and their counterparts. More than 90% of Indian households prefer these investment tools. This is because majorly investors find these avenues easy and safe to understand and invest in. However, when you look at the nuances, the Fixed Deposit comes off as a better investment than gold. To understand this better let us look at how investing in an FD and gold work separately.

Investing in a Fixed Deposit
Fixed Deposits are offered by banks, Non-Banking Financial Companies, and the post office. Each has its features and benefits, it falls on you as the investor to pick one that best suits your needs. For maximum returns, the best instrument is one that has the highest interest rate as this directly translates to returns. Here, company FDs may be your best option as they have high FD rates, usually surpassing the competition. NBFC FD like Bajaj Finance offer the dual advantage of safety along with high FD interest rates making it a great investment option. Along with this comes a suite of other benefits like loan against FD facility, online investment process, etc. The earlier you get started, the better are your returns as you stay invested for longer and enjoy the benefit of compounding interest.

Investing in an FD is very simple you can either do it offline by visiting your nearest branch and submitting necessary documents or you can do it online from the comfort of your home. Investing online is extremely easy. With the right financier like Bajaj Finance, you can do it in under 10 minutes by just visiting the website, filling in essential details like initial deposit amount, tenure, complete KYC, and link account post that the money will be deducted and your account will be created. You can track all of this from just your phone anytime.

The only thing that you need to take care of while investing in an FD are the interest rate and safety ratings. A higher interest rate might look lucrative but if the ratings accredited by CRISIL and ICRA (the top-most credit rating agencies in India) are poor then you might be at risk of default and untimely payments. Bajaj Finance Fixed Deposits enjoy a [ICRA]AAA(Stable), indicating the highest level of safety and lowest investment risk. BFL FDs have also a rating of CRISIL AAA/ STABLE which is another reason to invest.

Investing in Gold
Investing in gold is much simpler you can visit your nearby jeweller and purchase gold. Many companies sell it online as well. But, this market is extremely unorganised. This makes it very risky to invest in gold. With the current ongoing rate of about 51,000 per 10 gram gold is not only very expensive but knowing if the coin or biscuit you purchase is pure is a struggle. In India, the jewellery sector is highly unorganised making it difficult to trust the quality of the gold you purchase and sell. This could lead to losses. Also, the rate keeps fluctuating which makes it a dynamic investment. It is a reliable option for the long term but is very volatile in the short term.

FD v/s Gold
Gold and fixed deposits are low-risk, guaranteed-return investments. Gold offers excellent profits and easy buy-and-sell flexibility. Gold investment offers long-term earnings and tax savings. Fixed deposits offer low, stable returns and are unaffected by market swings. You must invest based on your liquidity needs, financial goals, and risk appetite.

These are a few reasons why investing in gold can be a little trickier than investing in an FD.

Calculate FD returns through our FD calculator