Difference between Fixed Deposit and Mutual Funds in India
After demonetization
there is two major way of investment available in India i.e. fixed deposit and
mutual funds. Major question that keep on popping up in our mind is what difference
between fixed deposit and mutual funds is. Primarily fixed deposits are opened
with banks where as mutual funds are managed by mutual funds companies. Difference
between fixed deposit and mutual funds in India is mainly risk appetite of
investor. When it comes to returns and taxation points, we need to be more elaborative
to learn everything about it. Considerably mutual funds are considered more risky
than fixed deposit. But perception has witnessed a wider shift after
demonetization. People are more inclined towards mutual funds. We will compare
both of these on various parameters like risk, return, duration, taxation, tax
savings, does and don’ts and much more.
Risk factor in mutual funds and fixed deposits: fixed deposits are considered safer in terms of risk associated with it. There are various three type of mutual funds in terms of risk associated with it i.e. equity mutual funds, hybrid mutual funds and debt mutual funds. Equity mutual funds considered higher risky and high return where as hybrid is moderately risky and debt funds are considered low risky. Debt funds in mutual funds are relatively compared with bank fix deposits.
Home Top Up Loan Vs. Personal Loan Vs. Gold Loan: Which One To Choose
Taxation in Mutual
funds and fixed deposit: equity funds and hybrid funds are concerned, they will
be regarded as short-term if the holding period is under 12 months and
long-term if the holding period is over 12 months. In case of debt funds, a
holding period of less than 36 months will mean that they are short-term while
a holding period of 36 months or more will mean that they are long-term.
Long-term capital gains on equity mutual funds and hybrid mutual funds over
Rs.1 lakh will be subject to tax at 10%, while short-term capital gains will
attract 15%. In case of debt funds, the long-term capital gains will be 20%
after indexation, while the short-term capital gains will be as per the tax
slab. In the case of fixed deposits, any interest an individual earns on his or
her investment is taxable depending on which tax slab the individual comes
under.
Advantages of investing in Mutual funds:
Low limit of investment
Diversification of fund
Management of funds by professionals
Benefits of equity without directly exposing to market
Short term tax benefits
Pradhan Mantri Awas Yojna (PMAY) Complete Details, Apply Online, Subsidy, Eligibility, Criteria, Income, Carpet Area And Latest Modification In PMAY
Fix your goals and
assess your risk appetite, you are defiantly going to be benefited of magic of
equity and debt.
Disclaimer: Mutual
Fund investments will be subject to market risks. Any mutual fund listed in the
document does not guarantee fund performance or its underlying
creditworthiness. Do read the mutual fund document thoroughly before investing.
Specific investment needs and other factors have to be taken into account while
designing a mutual fund portfolio.
GST
rates of 18% applicable for all financial services effective July 1, 2017.
0 comments: