fd vs stock

Stocks vs. Fixed Deposits: Where to Invest?

Investment is considered to be the monetary backbone of the lifestyle you lead. Every investment holds its share of advantages and disadvantages. The three most common types of investments are Fixed Deposit (FD), Stock Market, and Real Estate. Balancing the merits and demerits of the investment plans can help you get the best out of your investments. You can choose the right investment plan based on your readiness to invest and on your risk-taking ability.

What is an FD?

FD (also known as term deposit) is a financial instrument where you can lock in money for a fixed tenor at a predefined interest rate. Popular financial providers like Bajaj Finance offers a unique range of options for FD for women, senior citizens, and children. The high FD interest rates and guaranteed returns are what makes Fixed Deposit(FD) the most preferred investment vehicle

Primary Features of FD

  • Flexible tenor ranging from 12-60 months. Although, this tenor varies among financial providers.
  • Since FDs are not subject to market risks, you get assured returns for your investments.
  • Risks associated with the investment is negligible.
  • The lock-in period of an FD is predetermined. Premature withdrawals lead to deduction a portion of your FD interest rates.
  • FD can be used as collateral against loan with comparatively lower interest rates.

What are Stocks?

Stocks (commonly known as shares or equity) can be defined as a share in the ownership of a property/portion of a company. Owning stocks of a company give you the right to get dividends and to vote during the meetings of shareholders. Also, it gives you the authority to sell your share to somebody else.

Primary Features of Stocks

  • Very easy to purchase or sell.
  • Online research can help in finding the reliability of the company.
  • Long-term investments yield higher benefits than all other investment plans.
  • Helps in growing capital appreciations.
  • High risks involved due to the volatile nature of stock markets.
  • The investment returns are dependent on the performance of the company.

Difference between Fixed Deposit and Stocks

Below are a few differences between stocks and fixed deposits to help you decide where to invest your hard-earned money in.

Fixed Deposits Stocks
Not dependent on market fluctuations Highly dependent on market fluctuations
Fixed rate of interest Indefinite rate of interest
Additional 0.25% increase in interest rates for senior citizens No specified interest rates assigned for senior citizens
Short-term and long-term options available Short-term investment usually do not benefit
Guaranteed returns The returns are subject to market risks
Tax benefits are available at specific terms and conditions The dividends from stock market investment are free from tax
Premature withdrawal will invite penalties Flexible withdrawals
Returns can be predetermined using online FD calculator Returns cannot be predicted due to the volatility

You can easily open an FD account online within few clicks and some minimal document submission from anywhere in the world with Bajaj Finance. You can deposit as low as 25000 rupees with interest rates up to 9.10% (for senior citizens) which is the highest FD interest rates offered in India. Some additional benefits include, online calculation of FD returns and interest rates using the easily available FD calculator on the website, and assured returns.

Bajaj Finance is certified from CRISIL with FAAA ranking and from ICRA with MAAA ranking which is the highest possible ranking given to financial providers. You can invest in stocks to gain higher returns after a long-term investment, but a monetary backup with FD will prevent you from losing your assets all at once.

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Christine Carter

Christine Carter is an experienced health expert and owns a clinic. Christine has a keen interest in sharing her extensive knowledge of health and fitness with people through her informative, useful write-ups.

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