It is essential to invest a part of your income in suitable instruments to secure your financial future. Investments can help you grow your money over time. So, you will be able to accomplish your monetary objectives in the long run. Today, fixed deposits and stocks are two popular instruments available in the market.
What is a fixed deposit?
Fixed deposits (FDs) are an investment avenue offered by banks and non-banking financial companies. They provide fixed and guaranteed returns. Here, depositors can select the tenure of their deposits, and it is a crucial factor that can influence the interest rate. Financial institutions like Mahindra Finance offer different types of FDs like cumulative FD, non-cumulative FD, and senior citizen FD at high fixed deposit interest rates.
What are stocks?
Stocks are security that allows the shareholder to own a fraction of a company. They are commonly known as shares and can be traded on stock exchanges.
Differences between FDs and stocks
Here are a few factors that can help you distinguish between FDs and stock investing:
|Risk||The risk associated with FDs is nil, as they provide assured returns on investments.||
As stocks are influenced by market fluctuations, they are considered to be risky.
|Returns||FDs provide lower returns compared to stocks.||
The returns are high, as they are dependent on the performance of the market. Therefore, it is advisable to stay invested in stocks with a long-term perspective to reap higher returns.
|Duration||Usually, the tenure of FDs ranges from one year to five years. FDs come with a lock-in period of three months. You can renew them on maturity.||
You can stay invested in stocks for as long as you want. These instruments do not have any lock-in duration.
|Investment||Mahindra Finance gives you the opportunity to start an FD with a minimum investment of INR 5,000||
There is no minimum amount required to purchase a stock, but it should be equivalent to the ongoing rate at the stock exchange. If you want to earn higher returns, you will have to invest a considerably huge sum.
FDs and Stocks both are considered good investments. However, before taking a call, you need to analyze your risk-bearing appetite. If you are a risk-taker, you can invest in stocks. Conversely, if you do not want to take any risk, it is recommended to invest in FDs. You can check the fixed deposit eligibility criteria on the Mahindra Finance website. Over there, you will also get information regarding the various FD rates.