Get FD or invest in debt funds? The expert understands where the money is safer, where the big returns come from

New Delhi. Putting your hard-earned money to a good place is a challenging task. There are many investment opportunities on the market. There are some advantages in all schemes and there are some disadvantages as well. Because of this, the investor gets confused. There is a dilemma in many people’s minds about who should choose between fixed deposits and debt funds. At the same time, some people think that both are the same. However, this is not the case. Fixed deposit is considered a safe investment. But one of its downsides is that it doesn’t get a lot of returns.

So far it has been observed that debt funds have achieved higher returns than FDs. Debt funds are considered short-term investments. Debt funds have market-related risk. Large banks in the country pay up to 7.5 percent interest on fixed deposits from 1 to 5 years. In general, debt fund returns are higher than bank FDs. If you also want to invest money in either of these, then first find out about their returns, risks and taxation.

Also read this – If there is no PAN, FD is double taxed, you know what the income tax rule says

To return
money control According to a report by Money Honey Financial Services, Anup Bhaiya says the impact of an interest rate hike is greater on debt funds because bond yields in the secondary market react more quickly to changes in interest rates. At the same time, FD rates are rising with a lag. However, debt funds do not guarantee returns. At the same time, FD has a return guarantee.

risk
Priyadarshini Mulye, SEBI registered investment adviser and founder of EarthFinPlan.com says that up to Rs 5 lakh invested in term deposits is perfectly safe. But there is no such guarantee with debt funds.

expenditure
There are no fees for investing in FD. While investing in debt funds entails a recurring expense ratio. It can be up to 1 percent.

taxation
Mihir Tanna, deputy director of SK Patodia & Associates, says the long-term capital gains tax is no longer levied on debt fund investments, it has now been brought under the purview of the short-term capital gains tax. TDS is also not applicable in debt funds. If interest income from fixed deposit is more than 40,000 rupees per year, the bank will deduct 10% TDS. A taxpayer who is not a taxpayer must file Form 15H or 15G to save TDS.

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