Many of the investors get stuck in middle when it comes to choose from Mutual Funds or Fixed Deposits as among the both which one generates more returns with less risk. It’s an obvious nature of every investor to opt the best segment for optimum gains. Before making choice of any particular investment form it is very crucial to have clear knowledge about both mutual fund and fixed deposit based on which the most suitable one can be adopted as per requirement of the investors.
To manage both investments the advisors need a platform and the same can be fulfilled through Mutual Fund Software which makes the management of assets convenient for the financial advisors.
What is Mutual Fund?
Mutual Fund is a combination of various instruments including equity, debt and other form of securities invested by various investors in a large accumulation of money. The reward and risk commonly belongs to the investors in proportionate to the amount of investment made by them.
Benefits of Mutual Fund:
- Returns are based on performance of investment markets.
- Risk is commonly shared by investors and limited to amount of investment.
- Liquidity is maintained in the hands of investors.
- Schemes are formed with combination of debt and equity.
- Cost effective investment with optimized returns.
What is Fixed Deposits?
Fixed Deposits refers to a form of investment where investors park their surplus money with banking or non banking financial institutions with a higher rate of interest as assured return within defined period of time. The withdrawal of funds before decided tenure leads to loss on principal amount.
Benefits of Fixed Deposit:
- Fixed rate of returns irrespective of market conditions.
- No withdrawal expenses and charges over the invested funds.
- Availability of flexible tenure for investment period.
- Easy to draw loans on fixed deposits.
- Secured form of investment method.
Difference between Mutual Funds and Fixed Deposits
Mutual Funds | Fixed Deposit |
1 Returns are based on market fluctuations. | 1 Fixed Interest rate is received on deposits. |
2 High Risk associated with funds. | 2 Low risks in comparison of mutual funds. |
3 Instant withdrawals are possible. | 3 Amount is received on maturity. |
4 Charges are associated with mutual funds. | 4 No charges with fixed deposits. |
5 Liquidity is available with investor. | 5 No Liquidity up to maturity. |
The platform to invest in is depend upon the objective of investors like in case investor wish to invest securely with no risk and assured returns then fixed deposits are recommended for investment. Contrary, the investors have potential and want to hold high risk for more returns within short span and maintaining liquidity then in such case mutual funds is best option for investment.
The monitoring of funds is foremost for advisors whether invested in Mutual Funds or Fixed Deposits which is possible through Mutual Fund Software for Distributors as it ensures constant progress of funds to deliver fruitful returns to the investors.
With the above comparison investors can select the investment segment wisely and conveniently based on the desire to borne the risk in the market of investments. The amount invested in fixed deposits gets blocked for a specified period and can be redeemed at the time of maturity while the mutual fund gives the freedom of redemption to the investor. Both segments has own significance selecting a one depends upon requirement of the investors.
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