Fixed deposits involve placing a lump sum with a bank for a fixed period at a predetermined interest rate. Returns usually range between 6% and 7% per year, and the final amount is known in advance.
The structure offers low risk, but growth remains slow. Inflation can reduce the real value of returns over time.
Mutual funds pool money from investors and invest across assets such as stocks and bonds. These investments are managed by fund managers and are linked to market performance. Returns can range between 12% and 15% annually. Investors can contribute regularly, often through monthly investments.
Time Gap
A monthly investment of Rs 10,000 in a mutual fund, assuming a 12% return, leads to a total investment of about Rs 25.2 lakh over time. This can grow to around Rs 1.13 crore in about 21 years, with nearly Rs 88.6 lakh generated as profit, according to the SBI Mutual Fund calculator.
In contrast, investing Rs 10 lakh in a fixed deposit at an assumed 7% interest rate takes more than 35 years to reach a similar corpus.
The maturity value in this case can be about Rs 1.15 crore, with profit of nearly Rs 1.05 crore, based on the SBI FD calculator.
Bottom Line
The comparison shows that mutual funds can reach the Rs 1 crore mark faster due to higher return potential and compounding over time.
Fixed deposits provide stable and predictable returns but require a longer duration to achieve similar outcomes.
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